Stocks on Wall Street declined sharply on Friday and bond prices soared after a speech by President Obama on jobs added to the uncertainty already weighing on financial markets over European sovereign debt and the weak economic recovery. ...
...Paul Ballew, a former Federal Reserve economist and now chief economist at Nationwide, said short-term interest rates in Greece were reflecting increased uncertainty in Europe as well as speculation over whether there would be adequate restructuring in that nation’s economy to address its problems.
There was also evidence of a flight to safety among investors, in which they shed stocks for bonds. Yields on Germany’s 10-year bonds declined, and the United States Treasury’s 10-year note yield fell to 1.93 percent, from 1.98 percent late Thursday, after touching a low of 1.89 percent. “Issue number two is the continued anxiety in the United States that the recovery continues to stall, and that we will not be getting growth as strong as we would need in terms of corporate profits,” said Mr. Ballew.
The fall in the markets is not about Obama but about Congress.
“Even yesterday’s speech raises questions of whether there will be support for fiscal policy,” he said about the president’s jobs address. ...Mr. Ballew said that questions persisted about how much of the proposal would pass. ...NYT
The Economist believes that "most likely, Republicans will cherry pick and pass the parts they like, such as free-trade deals," and "the odds that Mr Obama and Republicans can overcome their gaping differences in less than three months seem long indeed."
Markets in the US have been down more than 300 points today and are, at this writing, pulling up a bit.
