What Can We Expect From Bernanke's Testimony?

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July 17 (Bloomberg) -- Bloomberg Economics Editor Michael McKee previews Federal Reserve President Ben Bernanke's testimony before the House Financial Services committee. He speaks on Bloomberg Television's "Bloomberg Surveillance."

We have seen the markets really reacts negatively to his appearances.

To the idea that maybe they will start raising interest rates.

I brought along a chart.

If you are listening to -- en route bloomberg radio, imagine three lines curving upon each other.

Problem is you have, the bible mind shows -- the bottom line shows that before the april payroll reports came out, we had the markets expecting that they would raise rates in the middle of 2016. you are all the way back up to very early 2015. that is not what he wanted to see.

What does it say today about the distinction between the balance sheet and the interest rate strategy?

I still think a lot of viewers and listeners are confused about the two.

There is the balance sheet dynamics and then there is the interest-rate dynamic.

What are we we going to learn today?

He wants to keep them separate, the same thing he has been saying all along -- tapering is not tightening.

We're going to start buying fewer bonds, but that is not mean we will raise interest rates.

The markets will raise interest rates.

They have already done that.

He may actually warned today that that may slow the idea of tapering.

How does he communicate that if it is really up to the markets to determine whether tapering is indeed tightening because it can lead to tighter conditions, higher interest rates, higher mortgage rates -- the tricky thing he has got to do, he's got to talk about the economy a little bit, probably point out that since qe began, we're seeing a rising job creation, but we've we have seen gdp lower than it was before.

So you have got a really mixed economy.

Maybe it is not a the insurance policy that qe was supposed to be when we thought congress was going to have a problem with the fiscal cliff at the beginning of the year.

But we still need accommodation because it is still not growing quickly.

Robert, please.

If you look at this short and long and, the short end, the fed controls that rates by controlling a dial.

On the long end, they have to deal with the marketplace, and the marketplace is going to drive long raintes up before short rates.

There is nothing wrong with that.

Do you envision is going through a 2.70 10 year?

I hear a real indecisiveness about how high high yields can go.

There is a big argument on that.

The standard response has to be history tells us that the 10 year follows nominal gdp, which is over four right now , headed for five.

Will he there and three-month?

No, but i will be neutral for the 10 year.

Ben bernanke might use this kind of forum to talk about fiscal policy.

In the past, we've heard him scold or warned that this could be affecting the u.s. economy.

Certainly the economy.

Stable on the fiscal cliff.

Any other fiscal issues?

The same sort of message is given as before, the fed is doing what it can, congress should do what it can, but may be softening little bit because he is talking to deaf ears at this point.

We will see.

A: 30 is when you and i will focus on this.

Eight: 30th when he -- 8:30 is when it is released.

They save any more time to study.

Are you writing writing any congress asked questions for congress people?

They would probably ignore michael mckee.

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


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