19 Nov 2013
Flash: Fed taper in early 2014 looks like a good bet - TDS
FXstreet.com (Barcelona) - The FOMC QE policy regime remains in transition, notes Eric Green, Global Head of Rates, FX and Commodities Research at TDS, suggesting that risks of taper starting January to March 2014 remain relatively high.
Key Quotes
"Yellen was characteristically dovish in her confirmation hearings, but we would emphasize that her dovish remarks should be interpreted more in terms of forward guidance and not as a sign the tapering clock has been re-set."
"March still looks like a good bet and January even better should the budget impasse be resolved."
However, that is fast becoming of secondary importance. The bigger question is what the post tapering Yellen Fed will emphasize and why, and what mechanism Yellen will employ to manipulate the term structure to her advantage in a post QE regime."
Key Quotes
"Yellen was characteristically dovish in her confirmation hearings, but we would emphasize that her dovish remarks should be interpreted more in terms of forward guidance and not as a sign the tapering clock has been re-set."
"March still looks like a good bet and January even better should the budget impasse be resolved."
However, that is fast becoming of secondary importance. The bigger question is what the post tapering Yellen Fed will emphasize and why, and what mechanism Yellen will employ to manipulate the term structure to her advantage in a post QE regime."