U.S. equities have opened up slightly lower in early trading following the absence of economic reports along with recent comments by St. Louis Fed President James Bullard suggesting the Fed could still decide to taper their $85 billion quantitative easing program as early as October, depending on the economic data.
With many investors feeling confused and uncertain about how to position themselves around a host of mixed signals from the Fed since May and a recent surprising decision to not taper this month, it is unsurprising to see the Fed under pressure to clarify their intentions before the market.
“This was a close decision here in September” Bullard admitted on Bloomberg TV.
“October is a live meeting,” Bullard said.
“Rates went up a lot over the summer. For many on the committee that was a surprise” Bullard explained.
Mohamed A. El-Erian , CEO and co-CIO of PIMCO, was asked this morning on Bloomberg’s “In the Loop with Betty Liu” about whether the Fed has lost some credibility.
El-Erian responded by saying he doesn’t believe that the Fed has lost credibility while also admitting that the Fed has some explaining to do at a time when Fed Chairman Bernanke is on his way out, a new successor hasn’t been named yet, and the market is feeling somewhat confused over how the Fed plans to wind down their massive QE program.
“They are going through a very difficult transition both internal and external and they are sending mixed signals. They are going to have regain control of the narrative very quickly” El-Erian said.
“We’ve had President Bullard out with Bloomberg TV today…..let’s see what other officials come out in the next few days trying to regain control of the narrative” El-arian said.
“They should absolutely come out because the narrative is so confused right now that the market needs to know what were they thinking and what are they thinking” El-Erian added.