Last week's stockmarket bounce may be short-lived
Yellen could shock markets if she underplays dangers of oil field and Chinese busts at Wednesday's Fed meeting
AFTER a four-week-long retreat, US stocks finally bounced last week, but they did so on hopes of central-bank support. Those hopes may be dashed this week.
On Wednesday, the Federal Reserve will release its first policy statement since initiating a new rate cycle in December. While the US central bank is almost certainly not going to hike rates again, Fed chair Janet Yellen could still shock markets if she underplays the dangers of the oil field and Chinese busts.
Many Fed officials, such as Federal Reserve Bank of Dallas president Robert Kaplan, have acknowledged the need to pause until the implications of recent market fluctuations become clear. While central bankers are not interested in day-to-day swings on the stock market, the sell-off in junk-bond markets raises concerns about "financial conditions", which is of paramount concern to the Fed, the European Central Bank (ECB) and other monetary policymakers.
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