All tagged Federal Reserve

Analysts shuddered two months ago when the monthly Business Outlook Survey from the Philadelphia Federal Reserve plummeted unexpectedly, signaling a worrisome slowdown for manufacturers in the region. Although it covers only a corner of the U.S. – eastern Pennsylvania, southern New Jersey and Delaware – the survey provides an early clue to the more widely followed manufacturing index from the Institute for Supply Management. The dismal August reading from the Philly Fed raised fears that the economy was sliding into recession.
The yield on the 10-year Treasury note ended Friday at 1.93 percent, the lowest level since at least 1962 when the Treasury Department began publishing daily rates. The decline of approximately 150 basis points so far this year has been driven by fear that policymakers in Europe and the U.S. are unable to manage the overhang of sovereign debt, which threatens to destabilize the global banking system and tip the European and U.S. economies into recession. The bond market also is reacting to “Operation Twist,” the potential for the Federal Reserve to drive long-term rates even lower by selling shorter-term debt and using the proceeds to buy longer-term debt. Lower rates would encourage businesses to borrow and take on more risk, although the results are likely to be modest as long as business and consumer confidence remains depressed.