When the president of the Federal Reserve Bank of Atlanta speaks, investors listen. At least if that president — Dennis Lockhart — happens to sit on the Federal Open Market Committee, which has been talking for months about when to start “tapering” the Fed’s $85 billion-a-month purchases of mortgage-backed securities and long-term Treasurys.
Comments by Lockhart published today suggesting that the Fed should start tapering as soon as September were not out of line with previous statements from Fed Chair Ben Bernanke, but “it’s almost as if the markets were looking for an excuse to sell,” analyst Ryan Detric of Schaeffer’s Investment Research tells Reuters of today’s stock market slide.
Tapering is also a concern for real estate industry, since it will reduce, and ultimately remove, the artificial lid the Fed’s kept on mortgage rates during much of the downturn. Source: reuters.com.