“Have your summer vacation all booked? Hoping to ignore your phone for a while, feeling safe in your investments and secure in the knowledge that the world’s financial authorities aren’t planning any surprises just yet?
Think again.
U.S. Federal Reserve Chairman Ben Bernanke made it clear in congressional testimony last week that the central bank could very well entertain a change in policy sooner than many had predicted. That would mean providing less stimulus to the economy by cutting back on its bond buying program.
The result was an unsettling bout of volatility, with Treasury yields jumping while stocks slid, as investors feared the Fed’s support might start to recede.
And that means this could be a summer when investors may find the waves are not only on the beach.
While Fed-watchers are hard pressed to see a turning point at the bank’s June policy meeting, there are plenty of other spots this summer when the Fed could start to prepare markets for change.
Besides the June meeting, there is a policy meeting in July and the release of minutes from both those meetings that will follow. There are three Fridays where monthly jobs data will be released, and plenty of inflation readings and other, lesser economic datapoints.
And of course, there are other potential flashpoints. Will an heir to Bernanke emerge? Will the annual monetary policy symposium in Jackson Hole, Wyoming, this August matter without Ben Bernanke?
Here’s what to watch for this summer on the Fed front:
FED MEETINGS AND MINUTES….”
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