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News & ResearchQE Taper Decision Day

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Today's the day as far as financial markets are concerned.

We get the Federal Reserve's monetary policy announcement at 7pm UK time, where we'll finally get to see if tapering of quantitative easing has arrived, or if we're left guessing once more.

The overwhelming consensus on the Street is that we will see tapering and most see a $10bn reduction in monthly purchases of government debt and a $5bn reduction in the monthly purchase of mortgage backed securities.

It's probably fair to say that this is already priced in to the market, so we think that this could be a bit of a non event if that comes out exactly in line (though this is a big announcement with a lot of people watching, so if Bernanke sneezes during his press conference we could see a knee jerk sell off)

If they taper more than expected we should see a lot of Dollar strength and equity weakness, less than expected and the Dollar should sell off and equities rally, as the market see that they have more borrowed time to live on.

 

 

Wednesday September 18, 2013 by Robin Newbould