White House officials have confirmed that Fed's vice-chairman Janet Yellen will take over the reins of US monetary policy once Ben Bernanke is put out to pasture. Though most commentators believe she will prolong the US Federal Reserve's stimulus programme, eventually she will need to pare-back the Fed's bond-buying spree, which is currently running at around $85bn (£52.7bn) a month, without imperilling the US economic recovery.
If that balancing act wasn't hard enough, Ms Yellen could also be faced with the consequences of a possible US debt default. The IMF, together with America's chief creditors China and Japan, have warned that any such default risks severe instability in global financial markets, but it's still by no means clear whether there is sufficient support in the US Congress to raise the debt ceiling before the treasury department exhausts its borrowing authority on 17 October.
The impasse has already pushed yields on short-term US treasury bills to their highest level since 2008, but volatility measures for treasuries have actually fallen, an indication perhaps that investors are convinced that the Obama administration and its tea party opponents will reach an 11th hour compromise as they did back in 2011.
