• Says QE3 purchases only one reason for low yields.
  • Says low and anchored inflation explain low yields.
  • Expectation of high unemployment explains low yields.
  • Says low interest rates needed to spur growth.
  • U.S. government debt still regarded as safe haven asset.
  • Expectations that U.S. economic weakness will continue are pushing down long-term rates.
  • Policy will normalize when economy recovers.
  • One concern I have is potential that interest rate risk may exist in bank balance sheets.
  • Says if QE boosts U.S. growth then world will benefit.
  • Won’t deny rate differences do drive capital flows.
  • Says rate differences put pressure on exchange rates.
  • Fed policy probably not main factor driving flows.
  • Emerging markets have tools to manage capital flows.