Asian markets declined after the Fed announced a pullback on its bond-buying program, the second time in six weeks. The WSJ’s Deborah Kan speaks with Jake Lee about the ripple effect it has had on global markets.
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Bank of Canada real return bond sale median yield 1.190 pct
http://currenteconomictrendsandnews.com/wp-content/uploads/2013/11/36c30__p-89EKCgBk8MZdE.gif
TORONTO
TORONTO Nov 27 (Reuters) – The Bank of Canada said on Wednesday its auction of C$ 700 million ($ 661.28 million) of real return bonds due in 2047 produced a median yield of 1.190 percent.
A central Florida judge freed George Zimmerman on $ 9,000 bond on Tuesday and forbade him from possessing weapons or ammunition on charges of aggravated assault with a deadly weapon and domestic violence during a dispute with his girlfriend.
Zimmerman, who was acquitted this summer in the fatal shooting of unarmed black teenager Trayvon Martin, was arrested in Florida on Monday after police said he pointed a shotgun at his girlfriend.
Zimmerman, 30, was taken to a jail in Sanford, Florida, and faces three charges including aggravated assault, a felony; domestic violence battery; and criminal mischief.
© 2013 Thomson/Reuters. All rights reserved.
Bill Clinton will attempt again next week to do for Obamacare what has long eluded its namesake: Cut through the political noise and change the perception of a law much of the public doesn’t like or understand.
His speech at Clinton’s presidential library in Arkansas Wednesday is a continuation of the relationship that benefited the former and current president in the 2012 campaign. It’s a role Clinton has played before on behalf of the Affordable Care Act, which is rooted in the failed effort by he and his wife, Hillary Clinton, to pass comprehensive health care reform two decades ago.
Clinton is giving the speech at the request of the White House, but the choice of venue was his, and one that seemed natural to him, according to his aides.
(PHOTOS: 25 unforgettable Obamacare quotes)
“For a variety of reasons, including having hundreds of millions of dollars in negative ads run against the law, the administration has had a hard time communicating the law’s benefits and knocking down the false attacks,” said Democratic strategist Stephanie Cutter, who was deeply involved in the health reform effort when she was an adviser to President Barack Obama.
“There’s no one better to lay it all out for the American people than President Clinton,” she added. “He’ll cut through the rhetoric and get to the heart of the issue … ‘How does the law impact me and my family, and how much will my health care cost?’ Ultimately, that’s all the American people care about, and President Clinton knows how to put it in their terms.”
The aim of the speech may be broader than a continuation of Clinton’s well-received defense of the law last year at the Democratic National Convention in Charlotte, N.C., where he laid out the intricate legislation in a way people could understand. But the White House clearly framed it that way in a tweet from Obama aide Dan Pfeiffer shortly after it was announced on Wednesday.
(PHOTOS: Bill Clinton’s life and career)
“Excited to have President BillClinton, once dubbed Secretary of Explaining Stuff, talk about the health reform law on 9/4 in Little Rock,” read the tweet.
The venue is Bill Clinton’s home turf — his native Arkansas — and speaking in one of the poorest states in the nation could help him to highlight what the White House sees as the benefits of the bill.
The speech suggests that the relationship between Clinton and the White House will continue as long as there is a need in the final three years of Obama’s presidency — the period, of course, during which Hillary Clinton will decide whether to run again in 2016.
(Also on POLITICO: W.H. gears up for major new Obamacare push)
“He will lay down the facts about what is working and what is to come,” said a White House official of the speech.
“His Sept. 4th speech will be the first of a number of high-profile events and speeches by administration officials and allies throughout the fall aimed at raising awareness about the law. In addition to his remarks in Little Rock, President Clinton is also expected to continue to raise public awareness around the law during the critical months for open enrollment.”
Officials on both sides have tended to downplay the breathlessness with which every Clinton utterance related to Obama gets covered. Clinton’s usefulness goes only so far for Obama, but there is a recognition that he is seen as less polarizing than the president on certain topics.
(Also on POLITICO: TOP 5 complaints about Obamacare)
And Clinton supporters argue that he gives many speeches that are similar to the one he’ll deliver next week, but they don’t all get written about.
Still, health care is an issue that both Clintons care deeply about. And as Clinton attempts to highlight that Republicans have offered no alternative to the bill that the U.S. Supreme Court has upheld, his speech serves as a tacit reminder of how much work he and his wife put into health care early in his presidency.
Clinton has emerged as a big Obamacare booster over the past couple of years, working to calm a Democratic base that’s been either upset the law isn’t liberal enough or anxious about what could be a bumpy beginning.
(Also on POLITICO: Bill Clinton calls for action in March on Washington speech)
The stakes are high: In about a month, millions will be able to start signing up for Obamacare coverage. But new polling shows about 40 percent of the public remains confused about whether Obamacare is still the law — let alone what’s actually in it.
Bill Clinton will attempt again next week to do for Obamacare what has long eluded its namesake: Cut through the political noise and change the perception of a law much of the public doesn’t like or understand.
His speech at Clinton’s presidential library in Arkansas Wednesday is a continuation of the relationship that benefited the former and current president in the 2012 campaign. It’s a role Clinton has played before on behalf of the Affordable Care Act, which is rooted in the failed effort by he and his wife, Hillary Clinton, to pass comprehensive health care reform two decades ago.
Clinton is giving the speech at the request of the White House, but the choice of venue was his, and one that seemed natural to him, according to his aides.
(PHOTOS: 25 unforgettable Obamacare quotes)
“For a variety of reasons, including having hundreds of millions of dollars in negative ads run against the law, the administration has had a hard time communicating the law’s benefits and knocking down the false attacks,” said Democratic strategist Stephanie Cutter, who was deeply involved in the health reform effort when she was an adviser to President Barack Obama.
“There’s no one better to lay it all out for the American people than President Clinton,” she added. “He’ll cut through the rhetoric and get to the heart of the issue … ‘How does the law impact me and my family, and how much will my health care cost?’ Ultimately, that’s all the American people care about, and President Clinton knows how to put it in their terms.”
The aim of the speech may be broader than a continuation of Clinton’s well-received defense of the law last year at the Democratic National Convention in Charlotte, N.C., where he laid out the intricate legislation in a way people could understand. But the White House clearly framed it that way in a tweet from Obama aide Dan Pfeiffer shortly after it was announced on Wednesday.
(PHOTOS: Bill Clinton’s life and career)
“Excited to have President BillClinton, once dubbed Secretary of Explaining Stuff, talk about the health reform law on 9/4 in Little Rock,” read the tweet.
The venue is Bill Clinton’s home turf — his native Arkansas — and speaking in one of the poorest states in the nation could help him to highlight what the White House sees as the benefits of the bill.
The speech suggests that the relationship between Clinton and the White House will continue as long as there is a need in the final three years of Obama’s presidency — the period, of course, during which Hillary Clinton will decide whether to run again in 2016.
(Also on POLITICO: W.H. gears up for major new Obamacare push)
“He will lay down the facts about what is working and what is to come,” said a White House official of the speech.
“His Sept. 4th speech will be the first of a number of high-profile events and speeches by administration officials and allies throughout the fall aimed at raising awareness about the law. In addition to his remarks in Little Rock, President Clinton is also expected to continue to raise public awareness around the law during the critical months for open enrollment.”
Officials on both sides have tended to downplay the breathlessness with which every Clinton utterance related to Obama gets covered. Clinton’s usefulness goes only so far for Obama, but there is a recognition that he is seen as less polarizing than the president on certain topics.
(Also on POLITICO: TOP 5 complaints about Obamacare)
And Clinton supporters argue that he gives many speeches that are similar to the one he’ll deliver next week, but they don’t all get written about.
Still, health care is an issue that both Clintons care deeply about. And as Clinton attempts to highlight that Republicans have offered no alternative to the bill that the U.S. Supreme Court has upheld, his speech serves as a tacit reminder of how much work he and his wife put into health care early in his presidency.
Clinton has emerged as a big Obamacare booster over the past couple of years, working to calm a Democratic base that’s been either upset the law isn’t liberal enough or anxious about what could be a bumpy beginning.
(Also on POLITICO: Bill Clinton calls for action in March on Washington speech)
The stakes are high: In about a month, millions will be able to start signing up for Obamacare coverage. But new polling shows about 40 percent of the public remains confused about whether Obamacare is still the law — let alone what’s actually in it.
Downtown Detroit is seen looking south on Grand River Avenue in Detroit, Michigan July 25, 2013. Photo taken July 25, 2013.
Credit: Reuters/Rebecca Cook
NEW YORK |
NEW YORK (Reuters) – At first glance, it is hard to see Detroit’s bankruptcy filing as anything but another body blow for downtrodden U.S. municipal bond insurers, which could be on the hook to investors for hundreds of millions of dollars in losses on the city’s debt.
But the city’s fiscal upheaval may in fact have the opposite effect – providing the marketing spark needed to revive a business decimated by the financial crisis like few others.
For issuers that have mostly gone without coverage since the 2007-09 financial crisis hammered most bond insurers, Detroit’s filing may serve as a stark reminder of the wisdom of buying insurance. Put simply, insurers’ payment guarantees make their bonds more attractive to investors.
“Investors are going to see the benefit of insurance in action more and more,” said Alan Schankel, head of fixed income research and strategy at Janney Capital Markets. “I think this is net-net a positive marketing story for bond insurance.”
Once a familiar fixture, bond insurance gave extra financial security to bondholders, including the retail investors who hold almost half of the $ 3.7 trillion market, while helping local issuers lower borrowing costs.
Before the crisis, about half of all new municipal bonds had insurance from nine insurers, with nearly 60 percent covered in 2005. Last year, just 3.6 percent were insured, and this year the number is just over 3 percent, Thomson Reuters data shows.
Bond insurers collapsed during the financial crisis after they ventured into mortgage-backed securities in the years before 2007. Ratings agencies slashed their AAA ratings to junk or withdrew them altogether. That meant bond issuers no longer benefited from their coverage.
With insurers failing to make promised payments, their stock tanked and so did their businesses.
Insurers are among the biggest players in Detroit’s case, as about 86 percent of the city’s $ 8 billion debt is insured by six companies. But the bulk of losses is expected on only about $ 530 million of unsecured general obligation bonds, which are payable over the next 22 years.
That makes the hit insurers would take from Detroit manageable, analysts say. At the same time, coming after other municipals bankruptcies such as Jefferson County in Alabama or Stockton and San Bernardino in California, Detroit would help investors see the benefit of bond insurance.
In June, Detroit defaulted on $ 1.45 billion of bonds issued to fund its pension obligations. Syncora, which insured most of those obligations, covered $ 24.7 million.
But Financial Guaranty Insurance, on the other hand, which is undergoing a court-ordered rehabilitation process, failed to pay about $ 16.2 million.
Insurers will keep paying debt service to most bondholders but not on the more than $ 5 billion of Detroit water and sewer bonds, as the city will keep current on those during the bankruptcy process.
Despite the record low presence of insurers on the primary market, some lower-grade, lesser-known issuers have reaped the benefits of insurance, with 645 deals insured for a total value of $ 6.57 billion so far this year.
The New York Dormitory Authority issued $ 60 million on behalf of Roosevelt school district earlier this year. Officials said insurance with Build America Mutual (BAM) saved 10 basis points on the borrowing costs, or about $ 200,000.
In March 2012, the Lafayette Yard Community Development Corporation sold $ 15.3 million of bonds guaranteed by the city of Trenton in New Jersey. After paying an insurance premium of about $ 139,000, the issuer saved about $ 60,000, in present value debt service payments, according to advisers for Trenton.
UNVIABLE BUSINESS MODEL?
Not everyone, however, is buying the idea that muni bond insurance is going to make a comeback.
“It’s not a very viable business model,” said Dan Berger, a muni market analyst at Municipal Market Data, a unit of Thomson Reuters. “The longer people do without insurance, the less they see a need for it.”
Still, the ratings of bond insurers are looking healthier. Of the two active insurers, BAM is rated AA by Standard & Poor’s and Assured Guaranty’s (AGO.N) MAC is rated AA-. S&P upgraded National Public Finance Guarantee, the muni-only insurer formed out of MBIA insurance Corp, to A in May after it settled a lawsuit over restructuring with Societe Generale.
There are signs competition is starting to creep back in. After BAM entered the market in 2012 with a focus on the safest types of municipal bonds, Assured announced its own muni-bond only insurer, Municipal Assurance Corp, in July. MBIA is also tipped for a return to the market.
Assured accounted for 99.8 percent of $ 11.5 billion of the new issues insured in 2012, according to Thomson Reuters.
Both BAM and Assured say they saw an uptick in interest even before Detroit, and Assured expects the market to gain steam.
Other muni bond insurers either declined to comment or did not return requests for comment.
DETROIT CONTAGION A RISK TO INSURERS
Any positive Motown impact on the insurance business will come if and only if Detroit is not the start of wave of defaults across U.S. municipalities. Such a scenario would be a severe blow for the bond insurance industry.
“The amounts of losses that we are talking about here are really quite manageable,” said Mark Palmer, an equity analyst at BTIG Research. “(But) if Detroit really is the first domino, then it would be an issue. It’s our view that Detroit really is a one off,” he said.
Palmer has a buy rating on the stocks of Assured Guaranty, MBIA, and Ambac (AMBC.O) and believes all three insurers are significantly undervalued at current levels.
Analysts and investors who believe bond insurance may have hit bottom do not suggest the industry is headed back to pre-crisis peak. They simply predict a rising demand.
Duane McAllister, a portfolio manager at BMO Global Assets Management who helps oversee about $ 5 billion in muni bonds, says the insured part of his portfolio has fallen to about 20 percent from 35 to 40 percent before the crisis. He would like to see that climb back to 25 percent, or even 30 percent.
“My view is that the industry has bottomed and that it is climbing its way back slowly,” said McAllister. “They are going to get tested obviously in the Detroit bankruptcy scenario, but if they can come through that and they’re still in OK shape, then they will have proven their value.”
(Reporting by Edward Krudy, Editing by Tiziana Barghini and Dan Grebler)
LONDON |
LONDON (Reuters) – A watch adapted for the fictional British spy 007 in the James Bond movies sold for nearly 104,000 pounds ($ 160,000) at a pop culture auction on Wednesday after being bought, strapless, at car boot sale for 25 pounds.
The Breitling Top Time, worn by actor Sean Connery during 007′s mission to find stolen atomic bombs the 1965 movie “Thunderball”, was estimated to sell for between 40,000 and 60,000 pounds.
Auction house Christie’s said this was the first watch to be modified by the Q branch in the Bond movies and was equipped with a “Geiger counter” to help the suave secret agent detect the emission of nuclear radiation in the film.
Made by Breitling in 1962, it was adapted by the James Bond art department and was the only example produced for the movie, a Christie’s spokeswoman said.
She was unable to give details on the vendor or purchaser of the watch that was one of 252 lots at the auction house’s pop culture sale.
Among the many other items sold were Bob Dylan lyrics for an unreleased song and actress Elizabeth Taylor’s first wedding dress, which she wore as an 18-year-old when she married Conrad Hilton Junior in 1950 in one of the social events of that year attended by over 700 guests.
“The dress symbolizes one of the most iconic off-screen moments of ‘Golden Age Hollywood’,” Christie’s said in a statement.
The dress sold for nearly 122,000 pounds after an estimated sale price of 30,000 to 50,000 pounds.
(Reporting by Belinda Goldsmith, editing by Paul Casciato)
WASHINGTON (AP) — The Federal Reserve said Wednesday that it will maintain the pace of its bond-buying program to keep long-term interest rates at record lows. But it offered a more optimistic outlook for the U.S. economy and job market.
The brighter view of the economy could be a hint that the Fed is moving closer to reducing its bond purchases. But the statement issued after its two-day policy meeting gave no indication of when that might happen.
Investors reacted initially by selling both stocks and bonds. The Dow Jones industrial average was down 70 points shortly after the statement came out; minutes earlier, it had been down just 16. The yield on the 10-year Treasury note shot up to 2.27 percent from 2.21 percent just before the statement came out.
In the statement, the Fed says the economy is growing moderately. And for the first time it said the “downside risks to the outlook” had diminished since fall.
Timothy Duy, a University of Oregon economist who tracks the Fed, calls the statement “an open door for scaling back asset purchases as early as September.”
The fact that the Fed foresees less downside risk to the job market “gives them a reason to pull back” on its bond purchases, Duy says.
The Fed says it will keep buying $ 85 billion a month in bonds until the outlook for the job market improves substantially. The goal is to lower long-term interest rates to encourage borrowing, spending and investing. It hasn’t defined substantially.
The central bank also said that it would maintain its plan to keep short-term rates at record lows at least until unemployment reaches 6.5 percent.
The Fed also said that inflation was running below its 2 percent long-run objective, but noted that temporary factors were partly the reason.
The Fed also released its latest economic projections on Wednesday, which predicted that unemployment will fall a little faster this year, to 7.2 percent or 7.3 percent at the end of 2013 from 7.6 percent now. It thinks the rate will be between 6.5 percent and 6.8 percent by the end of 2014, better than its previous projection of 6.7 percent to 7 percent.
It said inflation could run as low as 0.8 percent this year. But the Fed predicts it will pick up next year to between 1.4 percent and 2 percent.
The statement was approved on a 10-2 vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, objected for the first time this year, saying he wanted a stronger commitment from the Fed to keep inflation from falling too low.
Esther George objected for the fourth time this year, again voicing concerns about inflation rising too quickly.
Like Duy, David Jones, chief economist at DMJ Advisors, thinks the Fed is preparing to start trimming its bond purchases as early as September.
“They are setting us up for tapering to begin,” Jones says. “They said the labor market has shown further improvement, and the risks to the economic outlook have diminished.”
The ultra-low rates engineered by the Fed have helped fuel a housing comeback, support economic growth, drive stocks to record highs and restore the wealth America lost to the recession.
Financial markets have been gyrating in the four weeks since Chairman Ben Bernanke told Congress the Fed might scale back its effort to keep long-term rates at record lows within “the next few meetings”— earlier than many had assumed.
Bernanke cautioned that the Fed would slow its support only if it felt confident the job market would show sustained improvement. And he also told lawmakers that the Fed must take care not to prematurely reduce its stimulus for the still-subpar economy.
The Fed announced after its September meeting that it would purchase $ 40 billion a month in mortgage bonds for as long as it deems necessary. And in December, the Fed expanded the program to $ 85 billion a month, adding $ 45 billion a month in Treasury bond purchases. The Treasury purchases replaced an expiring bond-purchase program.
Job growth picked up after the Fed announced the latest round of bond purchases. Since October, the economy has added an average of 196,500 jobs a month, up from 157,000 a month in the previous eight months.
Last month, the U.S. economy added a solid 175,000 jobs. But the unemployment rate is still high at 7.6 percent. Economists tend to regard the job market as healthy when unemployment is between 5 percent and 6 percent.
Copyright 2013 The Associated Press.
The Federal Reserve says it will leave in place its $ 85 billion purchase of securities each month, citing “a moderate pace” of economic expansion. The Fed will also leave low interest rates untouched.
Richard Drew/AP
The Federal Reserve says it will leave in place its $ 85 billion purchase of securities each month, citing “a moderate pace” of economic expansion. The Fed will also leave low interest rates untouched.
Richard Drew/AP
The Federal Reserve will continue its program of purchasing $ 85 billion in securities and will leave the target interest rate for federal funds untouched to support the U.S. economy, the U.S. central bank said in a policy update issued Wednesday afternoon.
Here’s a summary of the state of the U.S. economy from the Fed, which concluded two days of meetings today:
“Information received since the Federal Open Market Committee met in May suggests that economic activity has been expanding at a moderate pace. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth.”
To bolster the U.S. economy, the Federal Reserve has spent $ 85 billion in stimulus measures every month, purchasing a mix of Treasury bonds and mortgage-backed securities. It has also worked to keep interest rates low, in an attempt to encourage borrowing by businesses and households.
Chairman Ben Bernanke is scheduled to speak at a press conference at 2:30 p.m. ET; we will update this post with news from that event.
The Federal Open Market Committee’s statement also said that inflation had remained below the panel’s long-term goals, and that there is no reason to believe that will change.
Here’s the portion of the release dealing with interest rates:
“In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal.”
And here’s the part about the monthly purchase of securities:
“To help support a stronger economy… the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $ 40 billion per month and longer-term Treasury securities at a pace of $ 45 billion per month.”
Ten of the committee’s members voted to approve the new monetary policy; the two votes against were brought by James Bullard, president of the St. Louis Federal Reserve, and Esther L. George, president of the Kansas City Fed. Both cited concerns about the policy’s possible effects on inflation.
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington, Wednesday, May 22, 2013, before a Joint Economic Committee hearing on “The Economic Outlook”. Bernanke told Congress Wednesday that the U.S. job market remains weak and that it is too soon for the Federal Reserve to end its extraordinary stimulus programs. (AP Photo/Manuel Balce Ceneta)
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill in Washington, Wednesday, May 22, 2013, before a Joint Economic Committee hearing on “The Economic Outlook”. Bernanke told Congress Wednesday that the U.S. job market remains weak and that it is too soon for the Federal Reserve to end its extraordinary stimulus programs. (AP Photo/Manuel Balce Ceneta)
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WASHINGTON (AP) — The Federal Reserve signaled Wednesday that it’s moving closer to slowing its bond-buying program, which is intended to keep long-term interest rates at record lows.
Chairman Ben Bernanke said the Fed could start scaling back its $ 85 billion in monthly bond purchases later this year if the economy continues to improve. He said the reductions would occur in “measured steps” and that the purchases could end by the middle of next year.
He spoke at a news conference after the Fed ended a two-day policy meeting.
After a two-day meeting, the Fed voted to continue the pace of its bond-buying program for now. But it offered a more optimistic outlook for the U.S. economy and job market.
Investors reacted by selling both stocks and bonds. The Dow Jones industrial average was down 90 points shortly after Bernanke’s news conference began. The yield on the 10-year Treasury note shot up to 2.27 percent from 2.21 percent just before the statement came out.
In the statement, the Fed says the economy is growing moderately. And for the first time it said the “downside risks to the outlook” had diminished since fall.
Timothy Duy, a University of Oregon economist who tracks the Fed, calls the statement “an open door for scaling back asset purchases as early as September.”
The fact that the Fed foresees less downside risk to the job market “gives them a reason to pull back” on its bond purchases, Duy says.
The Fed says it will keep buying $ 85 billion a month in bonds until the outlook for the job market improves substantially. The goal is to lower long-term interest rates to encourage borrowing, spending and investing. It hasn’t defined substantially.
The central bank also said that it would maintain its plan to keep short-term rates at record lows at least until unemployment reaches 6.5 percent.
The Fed also said that inflation was running below its 2 percent long-run objective, but noted that temporary factors were partly the reason.
The Fed also released its latest economic projections on Wednesday, which predicted that unemployment will fall a little faster this year, to 7.2 percent or 7.3 percent at the end of 2013 from 7.6 percent now. It thinks the rate will be between 6.5 percent and 6.8 percent by the end of 2014, better than its previous projection of 6.7 percent to 7 percent.
“The more upbeat tone and the change in the unemployment forecast will only encourage expectations for action soon,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, wrote in a research note. “We continue to believe that tapering could start at the Sept. 17-18 meeting.”
The Fed said inflation could run as low as 0.8 percent this year. But the Fed predicts it will pick up next year to between 1.4 percent and 2 percent.
The statement was approved on a 10-2 vote. James Bullard, the president of the Federal Reserve Bank of St. Louis, objected for the first time this year, saying he wanted a stronger commitment from the Fed to keep inflation from falling too low.
Esther George objected for the fourth time this year, again voicing concerns about inflation rising too quickly.
The ultra-low rates engineered by the Fed have helped fuel a housing comeback, support economic growth, drive stocks to record highs and restore the wealth America lost to the recession.
Financial markets have been gyrating in the four weeks since Chairman Ben Bernanke told Congress the Fed might scale back its effort to keep long-term rates at record lows within “the next few meetings”— earlier than many had assumed.
Bernanke cautioned that the Fed would slow its support only if it felt confident the job market would show sustained improvement. And he also told lawmakers that the Fed must take care not to prematurely reduce its stimulus for the still-subpar economy.
The Fed announced after its September meeting that it would purchase $ 40 billion a month in mortgage bonds for as long as it deems necessary. And in December, the Fed expanded the program to $ 85 billion a month, adding $ 45 billion a month in Treasury bond purchases. The Treasury purchases replaced an expiring bond-purchase program.
Job growth picked up after the Fed announced the latest round of bond purchases. Since October, the economy has added an average of 196,500 jobs a month, up from 157,000 a month in the previous eight months.
Last month, the U.S. economy added a solid 175,000 jobs. But the unemployment rate is still high at 7.6 percent. Economists tend to regard the job market as healthy when unemployment is between 5 percent and 6 percent.
