President Barack Obama announced on Wednesday that he has officially nominated Janet Yellen to be the next Chairman of the Federal Reserve. Current Chairman Ben Bernanke finishes his term on January 31st 2014, with the successor undertaking a tall order.
Bernanke has focused on ultra-loose monetary policy to help boost the US economy with job creation being the catalyst to begin tapering. Yellen is seen by the market as Dovish and is expected that she will move forward in the same direction as Bernanke, focusing on job creation.
At a press conference yesterday Janet Yellen said:
I'm honoured and humbled by the faith you've placed in me
The US government shutdown continues with investors beginning to become concerned as each day passes and a potential US default moves closer. Congress has stated that at roughly the 17th October the US will only have around $30bn in cash available, and if the debt ceiling is not raised the US for the first time in history will be unable to pay its debt. This is an unlikely event, with the political jousting between the Republicans and the Democrats expected to go down to the wire, with agreement met before a disastrous default. It is unlikely that the current stalemate won’t be broken, but short dated US paper yields are increasing as investors quantifying the risk of default.
The cost of one-year insurance against a U.S. debt default via CDS is about €75K ($101,805) a year to cover €10m of U.S. Treasurys - Markit— Joe Bond (@Joe_Trading) October 10, 2013