Ethan Harris War Quotations

It is gradual step towards a little more flexibility. Inflation, the economy and the markets will dictate how much further they go. They say the economy is strong and that inflation risks are tilted a little to the upside. There is nothing yet in the data that will stop the Fed.

People will wake up and realize the war on terror has just moved one step forward,

Are the economic indicators looking like a recession? Absolutely. But you can still hold out hope that the war is resolved in a month or so and the economy can stage some kind of recovery.

It's not as friendly as some of the other inflation numbers, but it's just one indicator. We have no inflation warning signals from any of the other major inflation indicators.

The markets are going to be a bit uncertain as to how to react, given that the Fed is waiting in the wings. They are all going to be looking ahead toward the FOMC meeting to see what the Fed's verdict is on the data rather than reacting as it comes out. They'll be sort of holding their breath.

This large inflow is an important prop for the Treasury market, helping keep yields in their current low trading range. Not only is the inflow large relative to new Treasury supply, it may also help stabilize the market when it comes under pressure. If investors start to shy away from the U.S. market, the dollar comes under downward pressure and the Asian central banks pile in to support the U.S. market.

We're not going to be in a recession if the economy reverses quickly. But if the war keeps going on, recession is a major risk.