Daily commentary: Fed on hold until economic data is weaker

The big news yesterday was that Ben Bernanke did not back up Janet Yellen's dovish commentary from the night before. Fed Chair Bernanke did say that the Fed was prepared to use unconventional measures to maintain an accommodative stance. But he said that it would do so only if necessary, implying that we are not there yet. I don't think most people expected Bernanke to signal QE3 was coming. But after the dismal jobs report this month, there was chatter about the Fed extending its zero-rate policy out to four years or buying up long-term debt and selling short-term Treasuries. We didn't get this and that was mildly disappointing for markets, particularly goldbugs.

The US economy is at stall speed, meaning any exogenous shock from Europe or China could tip the US economy into recession. ...

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