The Economy is Still Pretty Weak: McBride

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Sept. 16 (Bloomberg) –- Bankrate.com Sr. Financial Analyst Greg McBride discusses the Fed and the inevitability of tapering. He speaks with Julie Hyman on Bloomberg Television's "Street Smart" (Source: Bloomberg)

He expects to see had and how markets will react.

Greg, we have been talking to a lot of folks about this recently.

Many folks are saying, if you look at the bond market, you are seeing the stimulus of -- of stimulus stimulus tapering being brought in.

What's your forecast here?

What do you think will happen on wednesday?

I think the tapering is going to be a gametime decision.

It is inevitable, whether it comes this month or next month.

The 10-year yield is up from 1.6% as recently as may.

Now 2.85, 2.9%. i think pricing ends the inevitability of -- of that pricing.

Are you probably looking at $10 billion to $15 billion a month.

So in other words buying 70 to 75 billion a month with more of a bias toward the mortgage-backed securities.

When the process is pretty much transparent and communicated from the fed, do you think that still puts the 10-year date more solidly above 3% by the end of the year?

I think a lot of that will hinge odge the performance of the economy, foo.

While tapering has been priced in, the fact is, the economy is still pretty weak.

We're stuck in first gear, and unemployment is high.

If you get traction in the economy, yes, i think a 10-year note does move sustainably above the 3% mark.

As long as we have economic uncertainty, until the fed lays out a path for tapering, i think it will be difficult to sustain a level above 3% on the 10-year note.

Interestingly.

We have been fret pretty status attendant.

You think that sort of trade will continue then?

Yes.

Look, the fundamentals are really no different than they were a few months ago.

We have a slow-growth economy with high unemployment.

Untill that is -- uncertainty is resolved, like the budget debate and the debt ceiling debate, i think you are going to have this yo-yo effect on particularly the 10-year note

This text has been automatically generated. It may not be 100% accurate.

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