Bullard (Fed): “Reduced yields may mitigate banking stress repercussions”

Federal Reserve Bank of St. Louis President James Bullard said the recent sharp decline in bond yields would reduce the negative impact on the US economy from the recent turmoil in the banking sector.

Bullard noted that yields on 10-year US Treasuries fell by 50 basis points in recent weeks and two-year bonds by 100 basis points.

This, “could help mitigate some negative macroeconomic fallout, which might otherwise occur in the aftermath of a period of financial stress. Financial conditions have become tighter, yet financial stress and financial condition metrics to date remain low compared to the levels observed during the 2007-2009 global financial crisis.”

Bullard does not vote on monetary policy this year.