Meet the new regulator, Mr. Market

May 28, 2009 7:45am by

A new regulator has come to Washington, DC to oversee the Fed and the
political class to make sure they abide by certain constraints. His name
is Mr. Market (thank you legendary investor Ben Graham for the metaphor)
and he is finally speaking up and has a very large presence. As with
many govt actions to help the economy, they are paved with good
intentions but with unintended consequences. The question now is how
does DC respond, particularly the Fed as they have their next FOMC
meeting in June. The 7 yr note auction today will be key as it will be
more influenced by inflation expectations than the 2’s and 5’s this
week. Bankrate.com said the average 30 yr rate rose to 5.08% (and will
go higher in coming days) from 5%, the highest since Apr 7th. May Euro
Zone economic confidence rose 2 pts to the highest since Nov and was a
touch higher than expected. Durable Goods, Jobless Claims and New Home
Sales are out today.

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