Articles


  • Federal Reserve shocker: The "end of QE" rumor was true



    Yesterday, the rumor turned out to be a joke. Today, there was no rumor, but as we warned four hours ago, it was only a matter of time. Less than four hours later, the time has come, and Jon Hilsenrath’s “Fed Maps Exit from Stimulus”, conveniently appearing after the close, has just been released.

    From Hilsy, and one of his final attempts to remain relevant, pointing out what everyone already knew:

    Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.
    Don’t expect an imminent announcement.

    Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.
    The whisper sellside consensus is that it will be the September FOMC meeting, just after the Jackson Hole meeting at which Bernanke will be absent, that the first details of the flow “slowdown” will be revealed. But there is certainly no consensus.

    The Fed’s strategy for how and when to wind down the program is of intense interest in financial markets. While the strategy being debated leaves the Fed plenty of flexibility, it might not be the clear and steady path markets expect based on past experience.
    Officials are focusing on clarifying the strategy so markets don’t overreact about their next moves. For example, officials want to avoid creating expectations that their retreat will be a steady, uniform process like their approach from 2003 to 2006, when they raised short-term interest rates in a series of quarter-percentage-point increments over 17 straight policy meetings.
    That the market will obviously “overreact” is a given: for reasons why, read this. As for the rest of the WSJ piece, it is fluff.

    Regarding bets when the unwind begins, a look at the change in the VIX forward curves gives us some idea:


    Read full article
  • Rabindra Kayastha

    Authorized Person for MEX NEPAL
    Mob: +977 9856030634

  • Pawan Dhakal

    Biratnagar Branch Manager
    Mob: +977 9852033934

  • Our Clearing Member

    Himalayan Commodity Brokers
  • Our Banking Partners

    Laxmi Bank
  • Bank of Kathmandu
  • Nepal Investment Bank Limited
  • Century Commercial Bank Limited