Focus Falls on the Federal Reserve as $480 Billion Bond Raises Questions
Due to the Federal Reserve buying $120 billion per month for emergency purposes related to the pandemic, it is projected that they will be juggling around $480 billion in assets come September and December.
Although, economists and finance experts also project their concern on whether or not the amount would be beneficial as things slowly return to normal.
Despite this, senior US economist Andrew Hunter said that the pandemic proves to be a vital asset to the Federal Reserve’s procurement of their emergency bonds.
To CNN, he was quoted as saying “It’s harder now to argue that the Fed needs to keep going with these emergency support measures.”
The Federal Reserve has reportedly been the talk of the town after Central Bank leaders Christine Legarde (European Central Bank) and Andrew Bailey (Bank of England) are a no-show at the annual central bankers meeting in Wyoming still due to restrictions presented by the pandemic.
It is important to note that there are only two large-scale programs that were launched by The Federal Reserve for buying assets. The first was in the 2008 financial crisis, while the second one was launched in response to the pandemic.
Although the Federal Reserve is set to taper their expenses later in the year, the response of the larger economy and financial markets remain unclear.
Easy recovery may be on the horizon, senior macro strategist Michael Skordeles says, noting the 2013 “taper tantrum” which caused a strong bond market selloff.
Skordeles is confident that 2013’s circumstances were different and markets prove to be stronger, less than a decade later.
However, he and other experts advise that the Federal Reserve should step away before causing any big waves that could harm certain industries’ markets, stating that an early start will allow markets to recover gradually.
Following the trend of normalcy spreading all across the US with retail sales soaring to heights only experienced before the pandemic, plus the enhanced child tax credit, and millions of US residences receiving monthly bank deposits as per President Joe Biden’s $1.9 trillion stimulus package, the US has also reportedly added 943,000 jobs in July.
However, vaccine hesitancy among the population heightens management qualms among employers.
In a statement, Kevin Smith, who comes from a home health care agency in Massachusetts, says despite wanting all of their staff members to get the shot, he doesn’t want to “alienate” them or “risk losing them to a competitor.
“No one can afford to do that. That is why any employer in our industry is so reluctant to impose a mandate.”
A survey was run in June by health policy group KFF which asked unvaccinated employees what they would do if their company issued a mandate for them to get the vaccine. 50% say they would resign from their posts.
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This survey is one of the startling pieces of evidence that proves that despite things seemingly going back to normal all across America and many parts of the world, the pandemic is still a huge point of consideration in conversations about finance or employment.
