Fed Largess Aids U.S. Financial Strength BofA Deems Unrivaled

Paul Dykewicz

[Marriner S. Eccles Federal Reserve Board Building]

Fed Largess Aids U.S. Financial Strength BofA Deems Unrivaled (Bloomberg)

Five years after Federal Reserve Chairman Ben Bernanke cut U.S. interest rates toward zero to end the worst economic crisis since the Great Depression, America’s financial markets continue to rise. From money-market rates to yields on government and company bonds to equity prices, financial conditions in the United States seem healthier than before Lehman Brothers Holdings Inc. collapsed in 2008, even as growth slows in Asia and Europe. The U.S. now has the strongest economy among industrialized nations, which would be its highest rank since 2000, according to David Woo, New York-based global head of interest rate and currency strategy at Bank of America Corp. “Resilient is the word that comes to mind in regards to the U.S.,” Paul Montaquila, the fixed-income investment officer at BNP Paribas SA’s Bank of the West, which oversees $62 billion in assets. The strength of the financial markets shows “the U.S. is still the preferred market of choice for global investors and the most-important engine of growth.” While the Fed’s decision to push borrowing costs to historical lows in December 2008 helped developing economies recover faster as the U.S. housing bust crippled Americans’ ability to spend, investors are now showing greater conviction that the nation will underpin growth globally. The optimism exists despite the impasse between lawmakers last month that pushed the United States to the brink of its first default and left Americans’ approval of their congressional leaders at a 39-year low.

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The dollar and the yen fell this morning against growth-linked currencies which drew support from higher stock markets as investors responded positively to prospects of more economic reform in China.

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