Jump to content
House Price Crash Forum
Sign in to follow this  
rollover

Months Of Anticipation Will Come To An End This Week

Recommended Posts

The Federal Reserve finally says whether it will start to rein in its massive stimulus of the economy, which has flooded financial markets with some $2.75 trillion over the past five years, supercharging returns on everything from stocks to junk bonds. But for all the concerns that the reduced presence of such a giant asset buyer would be calamitous for investors, it appears equity and bond markets are poised to take this week's Fed decision largely in stride - provided the central bank doesn't surprise with the size of its move or shock in some other way. The Fed has telegraphed its intentions to pare back its monthly purchases of $85 billion in bonds at its two-day meeting that ends on Wednesday. The scale of the tapering and what Fed Chairman Ben Bernanke might say at his press conference are key here, but the steady messaging in the last few months means the coming week probably will not see carnage in the markets.

Investors have already done a lot of work in absorbing the Fed's message. Benchmark bond yields are now hovering near two-year highs, while stocks have edged off highs reached in early August, removing some of the froth that had started to concern some investment strategists.

"The Fed already got tapering without actually tapering," Link

Is all the talk about housing bubble related to the Fed's decision?

Share this post


Link to post
Share on other sites

The European Central Bank has room to manoeuvre to help offset any turbulence caused by the U.S. Federal Reserve reining in its monetary stimulus, ECB Executive Board member Peter Praet said. The bond market rout has driven yields higher across the board, including for low-risk German debt, which Praet said was a sign of "normalisation" after the record low rates of recent years.

He said that recent tensions on short-term money markets were partly due to falling liquidity in the banking system as some banks repaid 3-year loans that the ECB granted during the darkest episodes of the euro zone's debt crisis. Banks were paying back the 3-year loans because they were trying to shrink down their balance sheets and reduce lending to the economy, possibly causing a de facto tightening of monetary policy. Link

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   220 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.