The US economy remained stuck at a sluggish pace after the Federal Reserve chairman suggested the US central bank was prepared to reduce its bond acquisitions. The said purchases were to be done if its economic outlook proved right.
Bernanke's remarks confirmed the deepest worries of traders. The remarks were stated during the new conference after a central bank policy maker meeting. Traders were worried that the dawn of near interest free money from Fed approached end sooner than they had thought.
The worries casted about the less Fed stimulus were followed by eventual hikes in short term interest rates. This caused a flood in Treasuries selling with benchmark yields hitting fifteen months high and five year yields increasing to its highest range since August 2011.
Bernanke drew a sharp distinction between less Fed stimulus and tightening monetary policy. There were enough traders who were disappointed as the Fed chief did not give any warnings on his comments about the possible reduction on bond purchases.
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