Warsh Fumbles, Bonds Tumble
from Mind the Macro Hosted by Michael Roberts and Jeff Baldwin
In this episode, we discuss Japan's latest efforts to stabilize the yen, the latest GDP report, and Chair Warsh's most recent press conference. After the yen fell to its weakest level against the dollar in four decades, Japanese policymakers began selling United States Treasuries, pushing the yield on the 30 year Treasury to its highest level since the Global Financial Crisis. The yen's decline reflected the wide interest rate differential between Japan and the United States, rising energy import costs, and growing concerns over Japan's substantial public debt burden. Although real GDP expanded at an annualized rate of 1.5 percent, much of the apparent strength in consumer spending came from prescription drugs, motor vehicle purchases, food services, financial services and insurance, and nonprofit activity, raising questions about the breadth and durability of household demand. Finally, Chair Warsh's press conference offered little in the way of new information, inviting the question of why it was held at all. While such events are typically cordial, this one became noticeably more confrontational as reporters pressed him on the growing gap between his forceful rhetoric on inflation and the absence of corresponding policy action.
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