Posts Tagged ‘Fed’

Divergence from the path of normalisation and four surprises might materialise in 2014

We are, however, likely to see some divergence in 2014 from the scheduled normalisation trajectory: the monetary and fiscal policy mix in developed nations will probably not revert to the pattern of dynamics traditionally seen over economic cycles in the last few decades. As a result, four surprise factors might well confound investor and consensus expectations. Although, if we look at asset classes overall, European […]

US monetary policy: ‘Tapering’ not on a preset course

Wednesday’s statement by the Federal Open Market Committee and Fed chairman Ben Bernanke’s press conference were more dovish than expected. The main surprise was that the Fed decided not to start winding down asset purchases. Most forecasters, including us, were expecting a small monthly ‘taper’ of $10bn to $15bn. This surprise pushed long-term rates and […]

Central banks breeding anxiety

Measures taken by central banks and the way in which they communicate their monetary policy to the world at large in the coming weeks will have a significant bearing on the fate of the global economy. The knock-on effects on national and international economic indicators from the Fed’s statements and the PBoC’s pronouncements and actions in both May and June […]

The Fed’s bet

The mere suggestion that, if certain conditions were met, the central bank could begin to reduce the pace of asset purchases in the fourth quarter led to a disorderly retreat by investors. Those asset classes most sensitive to the dollar, notably gold and emerging-market bonds (see last month’s Editorial), were particularly affected by the shift in expectations about the likely trajectory of […]

US Federal Reserve monetary policy: Chairman Ben Bernanke more explicit on the likely QE exit path

The FOMC appeared more confident on its relatively optimistic growth scenario. The Fed updated its growth projections. They imply q-o-q GDP growth of around 3.0% annualised in H2 2013 and of more than 3.0% in 2014. Furthermore, forecasts on the unemployment rate over the next three years were revised significantly lower. However, the main surprise […]

The deleveraging cycle is advancing in different ways

In this article taken from Perspectives Special Edition 2013, Pictet’s CIO Yves Bonzon explains that inflation targeting as a tool of monetary policy, introduced in the early 80s under Paul Volcker, has finally been buried. Central banks are now moving towards a policy of targeting asset prices and other economic variables, primarily nominal GDP. Four […]

Watch the Fed’s balance sheet

The November 2012 issue of Perspectives is now available for downloading. In his editorial outlook, Chief Investment Officer Yves Bonzon explains that the markets already reflected, at least partially, the prospect of further expansion in the Fed’s balance sheet. We consider the metal silver as one of the types of asset most sensitive to quantitative […]

Two factors dominating the global economic scene

The October 2012 issue of Perspectives is now available for downloading. Today we preview the macroeconomics section of the magazine. The world economy is being tossed between the frying-pan and the fire: the first risk factor is cyclical, with economies progressively slowing down; the second is systemic, with the eurozone debt crisis acting as the […]

A new monetary era

The October 2012 issue of Perspectives is now available for downloading. In his editorial outlook, Chief Investment Officer Yves Bonzon explains that the unlimited QE of the US and its European cousin OMT differ significantly in terms of the likely monetary consequences on the two continents. The US and European central banks are widely perceived […]

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