Bernanke seen buying $1.14 trillion in assets by early 2014

Vehicle Sales

In December, light vehicles sold at an annualized pace of 15.3 million, down slightly from November’s pace of 15.46 million, which was the highest since 2008. Builders broke ground on new homes at an annual pace of 954,000 last month, also the highest since 2008.

“Housing data continue to corroborate that something real is going on here, that housing has turned the corner,” said Josh Feinman, the New York-based global chief economist for DB Advisors, the Deutsche Bank AG asset management unit that oversees about $228 billion, and a former Fed economist. “That’s been a huge headwind obviously holding us back.”

Improving Outlook

An improving economic outlook has helped drive stocks to the highest level in more than five years and yesterday pushed up the yield on Treasury 10-year notes briefly to 2% for the first time since April.

The Standard & Poor’s 500 Index closed Jan. 25 at 1,502.96, the highest since Dec. 10, 2007. The benchmark for American equities was little changed at 1,500.40 as of 10:17 a.m. in New York. The yield on the 10-year Treasury note fell less than 1 basis point, or 0.01 percentage point, to 1.96%.

St. Louis Fed President James Bullard and Kansas City’s Esther George are among regional bank presidents voicing concern about the risks from bond buying, which this month pushed the balance sheet above $3 trillion for the first time.

Bullard told reporters in Madison, Wisconsin, on Jan. 10 that the Fed’s stance is “a very aggressive policy, and it is making me a little bit nervous that we’re over-committing to easy policy.”

George said in a Jan. 10 speech in Kansas City, Missouri, that “a prolonged period of zero interest rates may substantially increase the risks of future financial imbalances.”

George, Bullard and Rosengren, along with Chicago Fed President Charles Evans, assume voting seats on the committee this year in an annual rotation among the district bank presidents.

Bloomberg News

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