U.S. Treasury Secretary Timothy Geithner is considering stepping down later this year, but will not make any decision until after until after debt limit negotiations conclude, people familiar with his thinking said on Thursday.
MIKE FEROLI, CHIEF US ECONOMIST, JP MORGAN, NEW YORK
You didn't have a big perceptible move so I suspect the market can live with it.
He has the biggest stature among economic policy makers. I don't know who will be the replacement. He has been there for a while. It's a demanding job he may have felt he has done his service.
JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO CHARLOTTE, NORTH
From everything that I have read or heard about today it's a natural thing for him that he would want to move on at this time. He has accomplished everything he wanted to accomplish. Once the budget deal is done, there won't be a lot of fiscal policy to be done.
For the markets it's a bit reassuring that he is leaving because if there were problems ahead he would stay.
Knowing him, I worked with him, he feels as if he has done his job. Not much is going to happen for a year and half until the election is done.
He wouldn't mention this without the President saying 'ok, that is fine by me.' If the President thought there were a big issue that had to be solved, as far as Treasury goes, he would ask him to stay. The big issues are dealing with Congress.
BRIAN DOLAN, CHIEF STRATEGIST, FOREX.COM, BEDMINSTER, NEW
By Geithner hanging around it should provide some comfort that an experienced manager will be there to see through the debate. He is leading an experienced team with more crisis experience than any team has seen in decades.
After Geithner leaves, it is a toss-up. It could generate some uncertainty about the direction of the economy, which could weigh on markets, but probably not too much. But perhaps getting some new blood in there it could be positive for the U.S. and the recovery.
When it comes down to it, Geithner is a second-tier story and a sideshow to what is happening in Greece. Tomorrow's ISM will more likely impact the market than this announcement, but perhaps people will point to Geithner as an excuse. Today's relief rally was a little exaggerated.
CARL LANTZ, INTEREST RATE STRATEGIST, CREDIT SUISSE, NEW YORK
I would guess that if Geithner stepped down you would see equities rally and rates selloff. Particularly front-end rates like Treasury bills. You could read it either way, you could see it as a sign that the debt ceiling negotiations are falling to pieces. But the House Republicans are definitely not enamored with Geithner, so if he was replaced by someone that got on better with House leadership, the odds of brokering a deal would seem to go up.
(If only a temporary deal debt ceiling deal reached, then Geithner leaves)
It seems like that is the path of least resistance and I think the bond market would be disappointed with a short extension, which would by definition mean smaller deficit cuts and the low hanging fruit in terms of deficit reduction and probably something that doesn't even come close to dealing with entitlements in a serious way. At the margin the government would lose a little bit of credibility and there would be bear steepening in the Treasury market.
I think as time goes on it's more realistic they will come to a half measure like a seven-month deal that probably won't warrant the label fiscal austerity.