In February of 2014 Janet Yellen began her four year appointment as Chair of the Board of Governors of the United States Federal Reserve System. She was appointed by President Barrack Obama and replaced Ben Bernanke. Yellen stated that she hopes to…”meet the great responsibilities that Congress has entrusted the Federal Reserve-to promote employment, stabilize prices and a strong and stable financial system”. Some of the financial tools at Yellen’s disposal at the Federal Reserve include quantitative easing in which the Federal Reserve carefully injects money into the markets. This is done to stabilize the economy and ease investment fears in the markets. Quantitative easing is not intended to over influence the markets by the Federal Reserve selling off too much of its assets at one time which could have disastrous results.
The (TLT) 20 year bond is showing signs of weakness at current levels, this could be good for the equity markets as these two markets are usually inverse to one another. We think that we will see another leg up to these markets in the near future and due to Jellen’s neutral position not to raise interest rates or radical reducing of stimulus. We still maintain an optimistic and positive outlook in the markets as long as current variables remain stable.
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