Printer Friendly

GOOD NEWS FOR FIXED INCOME MARKETS -- POLITICAL STANDOFF IN THE OFFING

GOOD NEWS FOR FIXED INCOME MARKETS -- POLITICAL STANDOFF IN THE OFFING
 NEW YORK, March 2 /PRNewswire/ -- Eugene J. Sherman, senior vice president and chief economist of the Federal Home Loan Bank of New York, today issued the following:
 Interest rates reached their recent low point in the first week of January. They then backed up over the next six weeks by 60 to 80 basis points, in our opinion, largely over fear that a stimulative fiscal package might be passed. Within the past week or so the proposed packages have become more specific, the political lines have been drawn and the probability of a standoff has increased. This is true political theatre, the equivalent of a Japanese Noh play in which the cognoscente know the outcome in advance but take pleasure from the dramatic structure and performance. In the end, Congress may in fact pass a consumption-oriented stimulus tax package designed to induce a veto by the president as "budget busting" and insufficiently pro-investment. Just as the fixed-income market deteriorated at the prospect of a stimulus package, it is likely to recover as this scenario plays out.
 Economists, as represented by the National Association of Business Economists, oppose a stimulus package. NABE said in its prepared statement, "Not since the Nixon wage-price controls has a clear majority of economists opposed a major economic program." To stimulate long term economic growth, the NABE membership would favor a reduction in capital gains taxes, membership would favor a reduction in capital gains taxes, elimination of taxation of dividends, reinstatement of the investment tax credit and increased public works spending, all intended to stimulate savings and investment to improve productivity. To that list we would add additional efforts at improved education. In our opinion, leadership this year would be represented by those who forswear "quick fixes" but instead opt to address the long term needs of the country.
 Further declines in intermediate and long term interest rates would help assure a spring recovery. Furthermore, if intermediate and long term rates decline, the Fed would have some latitude to ease another notch. A lot depends on political developments. Additionally, signs of renewed vigor in the economy could also discourage a "quick fix" packages. What the economy needs is a stage manager to give the vaudevillians, masquerading as political leaders, the hook.
 -0- 3/2/92
 /CONTACT: Eugene J. Sherman, senior vice president and chief economist of Federal Home Loan Bank of New York, 212-912-4829/ CO: Federal Home Loan Bank of New York ST: New York IN: FIN SU:


JP-SH -- NYFNS1 -- 3703 03/02/92 07:33 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Mar 2, 1992
Words:432
Previous Article:BATHROOMS IN BLOOM; GIVE YOUR BATHROOM A FRESH LOOK FOR SPRING
Next Article:HOLES IN SOLES ARE GETTING A SECOND LOOK
Topics:


Related Articles
Wachovia Securities names new global head of fixed income.
State Street launches two fixed-income ETFs.
Bank of America Merrill Lynch hires head of Americas Fixed Income Sales.
Bank of America Merrill Lynch names head of Americas Fixed Income Sales.
Morgan Stanley hires new executive.
Morgan Stanley names managing director.
BNP Paribas expands fixed income business.
Credit Agricole names Lee to head Singapore Fixed Income.
BNP strengthens US fixed income; plans 70 new hires.
BofA-Merrill Lynch hires fixed income staff in Australia.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters