FINANCIAL TIMES: …In a speech in Chicago, the US Federal Reserve chairman said he was watching for signs of reckless speculation caused by low interest rates, highlighting the danger that easy monetary policy could inflate new bubbles in asset prices.
His comments show how low interest rates have come to dominate global financial markets as waves of monetary easing send investors scurrying around the world for anywhere they can earn a return on their cash. The average yield on lowly rated corporate debt, or junk bonds, this week dipped below 5 per cent to a record low that is less than US Treasury bonds yielded in 2007.
“In light of the current low interest rate environment, we are watching particularly closely for instances of ‘reaching for yield’ and other forms of excessive risk-taking, which may affect asset prices and their relationships with fundamentals,” Mr Bernanke said… (more)
