The market has spoken.

Treasuries moved up after Larry Summers left his controversial candidacy for Fed chairman, Bloomberg's Wes Goodman and Neal Armstrong reported. Pimco's [profile] Mohamed El-Erian has been a prominent voice on the effect of Summers' candidacy on the bond market, Goodman and Armstrong write.

Goodman and Armstrong interviewed Peter Jolly, head of market research for the National Australia Bank, who was quoted as saying, "The market had assumed Summers was going to get the Fed chairmanship and that he would be more hawkish than other potential candidates. With him stepping aside and withdrawing his candidacy, we're likely to see bonds rally."

As expected Pimco is celebrating the end of Summer, saying short-term Treasuries will benefit post-Summers candidacy, Bloomberg's Wes Goodman writes.

El-Erian wrote on Business Insider, "Markets will likely interpret this as significantly increasing the probability of broad policy continuity at the Fed…This would be seen as being particularly supportive of the front-end of the Treasury curve."

Bill Gross tweeted that the difference between five and 30-year yields will likely widen after Summers' withdrawal from consideration, Goodman writes.

To read more on the Summers' departure and Pimco, click here., here, here, and here.  

Edited by: Casey Quinlan


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