24 Jun 2013
Flash: Fed tapering not a world-ending cataclysm – RBS
FXstreet.com (New York) - According to the RBS Research Team, “Expectations of an earlier than previously expected tapering of Fed asset purchases has cross- asset implications.”
Indeed, the flow of USDs from the Fed's easy monetary policy stance had found its way to emerging markets, supported commodity prices, inflated property markets and weakened current account positions. Not surprisingly, the prospect of the tap being turned off has seen the market go cold-turkey.
This culminated in the selling of the market's most heavily owned, most liquid assets. While this looks the "End of Mine, Everything", it's not an "End of the World" scenario. The Fed remains data dependent and the FOMC has upgraded its employment outlook and lowered its risk assessment. Markets will need validation of the new optimistic forecasts, most obviously starting with the June US employment report on July 5.
Indeed, the flow of USDs from the Fed's easy monetary policy stance had found its way to emerging markets, supported commodity prices, inflated property markets and weakened current account positions. Not surprisingly, the prospect of the tap being turned off has seen the market go cold-turkey.
This culminated in the selling of the market's most heavily owned, most liquid assets. While this looks the "End of Mine, Everything", it's not an "End of the World" scenario. The Fed remains data dependent and the FOMC has upgraded its employment outlook and lowered its risk assessment. Markets will need validation of the new optimistic forecasts, most obviously starting with the June US employment report on July 5.