Fed’s Bullard ‘cautiously optimistic’ on H2 growth

Spreads are coming back toward normal but are not yet at pre-crisis levels, St Louis Fed president Bullard says. High long-bond yields are both a reflection of inflation fears and optimism on the economy, he says. The risks of a Japanese-style deflation trap are receding, he says. The Fed is “shooting the rapids” in trying to avoid inflation as it wards off deflationary threats.