By Michael S. Derby
NEW YORK (Reuters) -New York Federal Reserve President John Williams acknowledged on Monday that investors are taking a look at how they invest in U.S. assets while noting he’s seen no large-scale move away from the nation, adding that the U.S. central bank can take its time before deciding its next interest rate move.
“We have heard over the last few months, there are some rumors or concerns about, well, do investors want to be so heavily invested” in Treasuries and other dollar assets given big government policy changes and large levels of uncertainty, Williams told a Mortgage Bankers Association conference in New York.
Amid this debate, “we’re not seeing major changes” in how investors deploy their cash in U.S. markets, although in the Treasury bond market, “we have seen some price effects,” Williams said.
Investors “have viewed and continue to view” the U.S. as “a great place to invest, including Treasuries, fixed income assets, so I think that narrative is still there,” Williams said. But he added that with all the volatility and uncertainty, investors are reflecting on “how they want to invest their portfolios.”
Williams, who leads the Fed bank closest to markets, also said when it comes to “core” fixed income markets like the Treasury market, the sector has been “functioning very well.”
The New York Fed chief also said “the economy is doing very well” at the moment amid lots of uncertainty and some signs in recent data that there could be trouble ahead. Fed interest rate policy is slightly restrictive of growth and is “well positioned” for what lies ahead, he said.
“It’s going to take some time to get a clear view” on how the economy is faring given all the government policy shifts and “we can take our time” to figure out where interest rate policy stands. He said clarity on the impact of things like the surge in import tariffs implemented by the Trump administration will not come quickly.
Williams cautioned against expecting imminent clarity on the economy and said some certainty is “not going to be in June” or July.
(Reporting by Michael S. Derby; Editing by Andrew Cawthorne and Paul Simao)
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