MARVIN LOH – DIRECTOR, TRADING SERVICES
Chairman Bernanke proved that the word could be as mighty as the pen this week, indicating his concern over the strength of the economic and employment recovery during several speaking engagements. His view is that accommodative monetary policy was necessary to push further gains on the employment front. From the market’s perspective, this was a signal that the Federal Reserve was keeping its foot on the liquidity pedal and remained far from considering raising rates. As such, Treasuries rallied this week, regaining over half of what they lost over the past two weeks. Most assets classes we track are closing out the first quarter with some of their largest gains in years, as an overly pessimistic view at the start of the year set the stage for a powerful rally. Stocks and the riskiest fixed income assets were the largest beneficiaries, with Treasuries reporting a negative total return. With many of the rally’s drivers still in place, we see gains continuing, but carefully watch for potential storm clouds, especially from Europe where gains in various sovereign bond markets have begun to reverse. Read the full commentary now.
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