Part I
Several Federal Reserve officials, according to the WSJ have been speaking this week,trying to convince traders and investors and speculators, that they didn´t hear what they heard, and didn´t saw what they saw.
After the FOMC meeting, Fed Chairmain said undoubtedly, that if the economy improves as it expects,the Fed will start to taper, Central Banks purchases of Bonds.
Markets globally heard that,and the investor community started to unwind positions in Bonds.
The timing of the Fed tap program of bonds wasn’t the most important factor, as a number of Fed officials seem to think. What matters is the timing of each traders’ own exit from a one-sided bet. It’s the old market saw about not being the one left holding the bag, and it kicked in High Frecuency Trade-style. The Fed either didn’t understand or appreciate this, and it’s been in damage-control mode ever since. The exit from the accomodative monetary policy,will not be as easy as the money printing.
The unconventional measures for monetary expansion brings misallocation of resources,uneven
increase of asset classes prices,appreciation of currencies in emerging markets and developing economies,where credit and property prices have been rapidly growing. A slower growth in China
and the gradual exit from easy money in the U.S.
Several Federal Reserve officials, according to the WSJ have been speaking this week,trying to convince traders and investors and speculators, that they didn´t hear what they heard, and didn´t saw what they saw.
After the FOMC meeting, Fed Chairmain said undoubtedly, that if the economy improves as it expects,the Fed will start to taper, Central Banks purchases of Bonds.
Markets globally heard that,and the investor community started to unwind positions in Bonds.
The timing of the Fed tap program of bonds wasn’t the most important factor, as a number of Fed officials seem to think. What matters is the timing of each traders’ own exit from a one-sided bet. It’s the old market saw about not being the one left holding the bag, and it kicked in High Frecuency Trade-style. The Fed either didn’t understand or appreciate this, and it’s been in damage-control mode ever since. The exit from the accomodative monetary policy,will not be as easy as the money printing.
The unconventional measures for monetary expansion brings misallocation of resources,uneven
increase of asset classes prices,appreciation of currencies in emerging markets and developing economies,where credit and property prices have been rapidly growing. A slower growth in China
and the gradual exit from easy money in the U.S.
