Chairman Ben is doing a spot of game fishing. The fish has had a long run out to sea; time to put the brake on and start to reel it in. After the last Fed meeting, Bernanke made a hawkish statement about tapering the current bout of quantitative easing. Markets swooned. Bonds
and equities sold off. The journos starting fretting about how banks were going to hit the wall as their bond holdings plunged. Then within 24 hours, Fed governors were on the stump, attenuating the message, insisting that they would not pull back too hard. This was echoed across the pond by Bank of England and European Central Bank officials . Almost immediately some analysts were saying markets had over-reacted. But Bernanke had achieved his objective. The first stage of bond market normalisation was done. In due course, stand by for another tug on the line, just to remind us that the fish will eventually end up in the boat. Of course, despite the maxim, 'Don't fight the Fed', central bankers are not gods. In game fishing, sometimes the black marlin can end up sinking the boat. Sometimes you play out too much line, others you yank too much in. But the Fed has been very careful to accumulate a range of tools to scale back the huge liquidity bulge it has created since Lehman's went down. Stand by for more reelin' and rockin' and hope the fish is landed safely. Cairns in Queensland bills itself as the black marlin capital of the world. The QSL is from 4QD Emerald in Queensland, some way south of Cairns, heard in Morgan Bay on AM in 1987, 11000 km away.
Chairman Ben is doing a spot of game fishing. The fish has had a long run out to sea; time to put the brake on and start to reel it in. After the last Fed meeting, Bernanke made a hawkish statement about tapering the current bout of quantitative easing. Markets swooned. Bonds and equities sold off. The journos starting fretting about how banks were going to hit the wall as their bond holdings plunged. Then within 24 hours, Fed governors were on the stump, attenuating the message, insisting that they would not pull back too hard. This was echoed across the pond by Bank of England and European Central Bank officials . Almost immediately some analysts were saying markets had over-reacted. But Bernanke had achieved his objective. The first stage of bond market normalisation was done. In due course, stand by for another tug on the line, just to remind us that the fish will eventually end up in the boat. Of course, despite the maxim, 'Don't fight the Fed', central bankers are not gods. In game fishing, sometimes the black marlin can end up sinking the boat. Sometimes you play out too much line, others you yank too much in. But the Fed has been very careful to accumulate a range of tools to scale back the huge liquidity bulge it has created since Lehman's went down. Stand by for more reelin' and rockin' and hope the fish is landed safely. Cairns in Queensland bills itself as the black marlin capital of the world. The QSL is from 4QD Emerald in Queensland, some way south of Cairns, heard in Morgan Bay on AM in 1987, 11000 km away.
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