Market exuberance

From Reuters

Fed Chair Alan Greenspan remarks,

"Because it is difficult to suppress growing market exuberance when the economic environment is perceived as more stable, a highly flexible system needs to be in place to rebalance an economy in which psychology and asset prices could change rapidly," he said.

Prices for both U.S. stocks and government bonds rose a bit after his remarks as traders showed relief he had not signaled higher-than-expected interest rates ahead.

The fact that he did not use the word "irrational" probably helped too.

The whole speech can be read at the Fed's web site.