Google Analytics

Thursday, January 30

30th Jan - Fed tapers again, regardless of EM

Previously on MoreLiver’s:

Follow ‘MoreLiver’ on Twitter

FOMC StatementFED
WSJ’s statement trackerWSJ
Parsing the Fed: How the Statement ChangedWSJ

Fed Stays CourseMarc to Market
Fed will reduce the long-term assets it purchases by another $10 bln in February.  That will bring its purchases to $65 bln a month, which is still about 50% larger than QE3 when it was initially announced, before Operation Twist purchases were folded into it. Notably there were not dissents.   It is the first unanimous result since 2011. 

The Fed tapers another USD10bn and recognizes recent pick-up in growthDanske Bank

Hilsenrath Takeaways: Fed Sets Bar on TaperingWSJ

Fed Foward-Guidance Fallacies And The Untenable Status QuoZH

Fed To Emerging Markets: "Hasta La Vista, Baby"ZH
Citi's Steven Englander:

Now Comes the Hard PartWSJ
“Don’t fight the Fed,” was a popular saying these past few years, when the market was going up. The saying is just as valid now that the market’s going down.

Recap: Fed Statement, Market ReactionsWSJ

The Fed Erred in Ignoring Emerging MarketsWSJ

The Fed’s converging misses on inflation and unemploymentalphaville / FT

Bernanke refused to play chicken with Turkey todayWaPo

Citing Growth, Fed Again Cuts Monthly Bond PurchasesNYT

And The Taper ContinuesTim Duy’s Fed Watch
But what seems more clear is that the US is about to be hit by another disinflationary shock.  That deserves careful attention, because inflation, I think, is at this moment the most important variable to watch as far as Fed policy is concerned.  The Fed is pushing forward with tapering on only the forecast of future inflation.  That forecast appears under threat. 

In Bernanke's final act, Fed cuts stimulus despite market turmoilReuters

Fed to stay the course on tapering, end QE by year endReuters

Analysis: Only time will define Bernanke's crisis-era legacy at FedReuters
Early assessments have been mostly positive. The former Princeton professor has been praised as the steady hand who helped steer the United States and world economies clear of a far more painful recession.