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Bond And Stock Futures Open Red - Buying Opportunity?
Erasing Friday's gains (and the well-documented VIX-driven melt-up into the close), S&P 500 futures have opened down 4.5 points (against JPY-carry for now), Treasuries are indicated 4-5bps higher in yield, and Gold is opening down 0.4%. Not in itself a large move but perhaps indicative of some concerns that Hilsenrath is on to something and the punchbowl is being ever so gradually pulled away (though, we suspect it is only a matter of time before this article is spun in a bullish light, suggesting that the Fed still does not have a firm timeline in mind, which by implication is bullish - no news is good news - and much more jawboning has to come before the real tapering talk begins). In the meantime, we are sure the clarion call to Buy-The-Feding-Dip will be heard and in the interest of balance, we offer some insight into 'valuations'.
S&P 500 futures open -4.5pts... erasing the closing ramp and Friday gains...
and Bonds are being sold too...
long way to go for both from when the disconnect began...
Which one are you going to believe? US Macro vs SPX and 10Y from the 'disconnect' above
But stocks are cheap I tell you...
(h/t @Not_Jim_Cramer)
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The tone of ZH seems to have changed very recently.. as if they learned to stop worrying and love the bomb.
Can't Fight the Fed.
Hilsenrath was meant to move the markets but it isn't clear how the move will go. Make another BTFD opportunty? Prepping for the overdue dump now that they got something like a blow off top? Just testing the waters so Bernanke, et al. have more info about the real move? It will be a week before we know but if the market doesn't do the normal "V" bottom and just moves flat after dropping to support it will be a bad omen for the bulls. I will weep for them. Not.
The move is clear... Ben must continue the buying, he just needs better entry points.
Shove it up your ass control-print man!
It was our Dr. Strangelove thread-jack a few weeks ago. People forget what a genius work of art it is.
Dr Copper also says "buy". Some decent knife catching on the JGB opening. Love the bomb.
Short treasuries Bitchez!!!
Ok white night I'm buying $1000 bucks of an ETF that shorts treasuries........I hope you are right.....
Keep your fingers crossed. Decent trend support lies just below these levels. Bet it bounces.
It's "already crossed the threshold" fatalism. There's no turning back from here - the CBs of the world have made clear they will print until all paper currencies are utterly destroyed.
This CNBC article essentially is saying that it won't be bad and if so it won't last etc. etc.. They blew up another bubble and they want to deflate it slowly (won't happen) before it pops.
http://www.cnbc.com/id/100730473
Betting on this market is like... betting. Fundamentals are completely irrelevant and the red or green status is determined entirely by the secret decisions of one man.
A "firm timeline in mind" for the Fed to pull the punchbowl away?
Hmmmm...
I'll take the bet that there is no economic ignition, liftoff and they become once again scared to death of the economic downturn taking on additional momentum, their fear of deflationary spiral reasserts itself (real or not matters none) and the printing continues under a "New and Improved" label.
The absence of reformation on the regulatory/financial/political interstices doesn't happen, no recovery.
There is a Liquidity Trap caused by a Credibility Trap and that ain't going away without reforms... which ain't gonna happen
As real deflation occures, it takes the currency with it.
All of the countries involved in the Asian finanical crisis seen their currencies waterfall in value by 40 to 50% in the face of high interest rates and deflation.
Deflation implies an APPRECIATING currency --- the nations you mention all saw just the opposite.
I wonder if you are not (mis)using the word "deflation" in a manner radically different from its usual meaning, that of a decreasing money supply and/or generally falling prices.
Classic. 7 secs.
https://www.youtube.com/watch?v=G2y8Sx4B2Sk
Do you know the difference between money and currency?
And please do not confuse high nominal interest rates yet negative in real terms with high real interest rates.
Whitenight what is the endgame??? What are you bracing for?
They have no say in when the bowl is pulled at this point, The bond market will decide.
Knucks and Lter did you guys see my links about the planes yesterday? I was on to something.
FONZ no, what links to planes.
You mean them Quincy jobs?
Did you ever get on to FlightAware and find out the stuff around your home?
Yeah the Quincy stuff. You see that? By me it was like that x 10. The Quincy thing was interesting because unlike by me, their residents actually look up. They called the FAA and the response was scary.
Fonz...
Yeah, saw that and did a buncha searching for the registration, company, etc., and didn't find anything different than anybody else.
Is kinda creepy that the FAA won't "comment" other than "no comment or I'll have to corn hole you" .... Doesn't leave much room for anything other than a bunch of questions, idle or not....
We've had experiences similar through time, even a few leaving massive trails, etc..... which I'll not bother to go into as too many people think I'm already in need of tin, barium and aluminum foil hats and respirators, and....
Aggh... you get the pic.
Yes, there's odd shit "not suppose to" be and easily explained, Mylar balloons, reflections, silent and persistent craft, whatever in them thar skies, my friend.
My aunt in Oceanside says not to worry...just domestic collapse civil war games.......all is well......
look, there are tons of debt which are not debt anymore because it is held on the Fed´s balance sheet. Next there are tons of new base money dollars.
So the real market debt to base money ratio has plunged. The more it plunges the less you can have a credit crunch BY DEFINITION. Ok, that leaves the big question mark on the derivatives.
Well then, if not to help the balance sheet of Ben's favored sons....I guess the fed must be printing all of this money to help unemployment......not
Yawn...more jawboning from the Fed. Have to threaten to take away QE to keep inflation in check and then bring it back when things slow down.
Marketwatch
Stocks and bonds will drop only when Barack Obama orders the Fed to call the margin on primary dealers.
That will happen only if it has been decided who is going to be the 4th sacrificial lamb after Bear Stearns, Lehman, MF Global.
I think voting is done and we are about to find out who is the lucky lamb and what altar will it be burned on, JPM's altar or GS's altar?
Delete triple post.... And I haven't started drinking yet.
LOL I can't wait till you have a few in you.
I still think POMO FOMO gooses this market until further notice.
Delete double post
Ms is the ugliest turd in that group. I still think the chaos will start with the insurance companies.
Notice that Hilsenrath article, IRS scandal and Benghazi scandal are all occuring simultaneously.
Old trick. Never let the attention focus on one event only.
I've been saying for a while that they need a distraction to tank this thing. It gives them a convenient excuse to cover their asses for their sorry corrupt asses.
you guys and this whole distraction thing. i think u are overthinkin it. they ask Obama a difficult question and he can just whip out a yoyo and roll it up and down and say "hey look at this". that should be sufficient.
lol i can't freaking stop laughing
Obama's got so many yoyo's I wonder how he picks the one to use. Watch this, "Around the World with Hillary." "Dead Cat Bounce Holder." Friggin Bonanza of glow in the dark one drop and their broke back up yoyo's too.
+1 Excellent sense of humor.
Or more specifically, when you don't want them to be looking at one specific event, divide their attention.
My gut feeling is that the Benghazi thing leads straight to the top, with something (presidential order preventing a rescue?) that if it got out would be so damaging it'd either require a resignation or wipe out Dems in the next set of house elections. Them being willing to throw what is likely to be multiple layers of IRS management that were assisting the president under the bus speaks volumes.
I still suspect as others here do that it's an even bigger distraction from the start of the avalanche of economic news that ends with the implosion of the current system.
avalanche of economic news that ends with the S&P topping out around 1700 before it takes a rest and heads higher.
Fixed it for you.
Listen, you guys are going to be right about the economy falling under the weight of this. But they don't need a distraction. They have Eric Dickholder in there to hide everything and the media happily looking the other way anyway. Who is actually applying any heat?
Benghazi is a different story.
Military is mad. Since bob woodward who is military man attacked obama, it hasn't stopped.
Former special forces member have been telling to Breitbart that all final command would come from the very top. They think obama gave the order to stand down because neither hillary nor panetta nor the commander in africa wanted to take the decision and they deferred higher.
If the military was so upset why did Petreus fall on the sword?
He could have went down swinging.
Oh no. Incorrect.
Obama appointed a military man to run CIA. That's like appointing a dog to run the cats.
Nobody liked petraeus at cia, nobody.
Okay, fair enough, I clearly defer to your knowledge here. But Breitbart is going to bring this whole thing down?
No, military industrial complex very very powerful people are serving the secrets.
Breitbart is the tool.
http://www.military.com/benefits/2013/05/09/commissaries-feel-hiring-freeze-fear-budget-cuts.html?ESRC=sm_todayinmil.nl
mad military
They may be mad, but when this country is finally acknowledged for being completely bankrupt, they will long for what they have today.
What a pussy this guy is....
"Sen. John McCain (R-Ariz.) refused to sign on to calls to possibly impeach President Barack Obama over Benghazi.
WASHINGTON -- As Republicans are increasingly calling the Obama administration's response to the Benghazi attacks a cover-up worse than Watergate and even floating impeachment, Sen. John McCain (R-Ariz.) urged a note of caution on Sunday, saying he wasn't yet willing to go that far.
"With all due respect, I think this is a serious issue," said McCain on ABC's "This Week." "I will even give the president the benefit of the doubt on some of these things. We need a select committee."
I can't stand that slug.
McCain is 1) a (R)ino aka Dem, and 2) recent member of TPTB. Seriously, his positions have gone 180 immediately after his presidential run. He's from my state, and no one I know believes he represents the state anymore. He's running on fumes from (senile) senior citizens from Sun City at this point.
Just assume McCain is part of the Obama cabinet and everything makes a shitload more sense.
What are your thoughts about the fact tha Obummer has been quietly replacing military leaders, even going so far as to replace leaders in hot zones?
Do not know why.
Fact is that even with the TPP plan, he's pushing for pharma.
http://en.wikipedia.org/wiki/Trans-Pacific_Strategic_Economic_Partnership
Reminder, obamacare is a gift to pharma lobby
Glow in the Dark one drop and they's broke. But as long as they spin at the end of the string...
The War Against History continues to drone on.
CIA is little more but an assassin's club now - and Obama is very friendly to their lust to murder.
I beleive you shold have said, ended w/ the insurance co.s. It's the biggest ponzi left after the MSM.
Fed SOMA lending is still very high at 16-24B/day indicating liquidity problems for the primary dealers
http://www.newyorkfed.org/markets/seclend/sec_lendop_Historical.cfm
http://www.zerohedge.com/news/2013-02-21/primary-dealer-cash-shortage
How they could lack liquidity while swimming in a world of printed fiat is beyond me. It's too bad I can't see WHO is needing to borrow but it seems there are bleeding wounds in the water.
Remember, Fed creates money by buying bonds. That is the only legal way to create money.
Primary Dealers have given bonds to the Fed in exchange for money.
Money is given to winning counterparties of the swaps they have to pay every quarter
Conclusion: Primary dealers are left without money and without bonds as collateral.
The whole system relies on collateral.
Strong $ and higher Treasury/bond yields are rough on equity markets. With POMO anything is possible.
I just consulted my belly button and the lint said BTFD.
Does your belly button lint charge 2 & 20?
With the USD/JPY bypassing the 100 Yen to dollar mark...I wouldnt get bearish on the S&P 500 until the USD/JPY went below 100. Plus right now the 10 year treasury note is down 18 basis points so no true flight to safety. This looks like another great opportunity to BTFD if you ask me. Plus hedges are cheap anyways.
This is the new connectivity diagram since November 2011.
1. infinete money.
2. FED computers and software.
3. exchanges.
4. stocks.
Result: Stocks go up.
Just BTFD and quit your belly-aching. We have all that Japanese counterfeit about to hit.
Guys, I am a newb to these things but can the S&P500 be traded when Asia opens? If not, sorry for the silly question.
btw, GOLD bitchez!
you can trade the SP500 futures (ES) if you have an account. That and most other products are available on the Globex.
thanks!
The Fed wants its cake and wants to eat it too. So while it is printing $85 billion a month, it is constantly threatening to reduce this amount to keep inflation in check. In the end, the FED will continue to print as US debt and unfunded liabilities rise at $8 trillion a year. If the Fed ends QE then it can lose $500 billion on its Treasury holdings and US interest on the debt rises by $400 billion to $600 billion a year - a situation that the Fed cannot tolerate.
So the Fed will never exit QE despite constantly threatening to do so. When it gets serious, you have to lie.
QE slowing is just around the corner, and when we get to the corner it will be just around the next corner...and when they increase QE it will be only temporary so they can slow then slow QE just around the corner.
They have to first increase QE by 100% in order to taper it down by 10%.
The fed has been eating cake the whole time. First it was QE. Followed by constant rumors of QE....followed by QE4eva bomb....followed by possibly ending QE. All the while we just cruise control higher on no volume.
It never ends. Kito asked me the other day what happens if they end QE and the market stays up permanently. My only answer is I eat the biggest fuckin steak and buy into this market and end like Robot trader until I get kicked off and head over to Yahoo finance.
Bad shit happened.
No matter what the futures show now, by the time we close on Monday, we'll be positive. Because the market only goes one way - straight UP! (It's the law.)
Gold opened DOWN 0.4%???
Care to elaborate, Tyler? My sell order was filled seconds after the open at 1447.40, a few TICKS away from Friday's futures close and fully $10 HIGHER than the official pit close. Just what -0.4% are we talking about?
Oh yeah, forgot... Accuracy of any kind is prohibited in ZH articles pertaining to PMs. Never mind...
xPat
You guys voting me down care to elaborate on why? Is it because I'm prone to calling ZH out on their consistent and persistent pattern of inaccuracy in everything PM-related? Is it my choice to use irrefutable and easily verifiable facts to frame my arguments?
Or some other reason? You tell me...
Why doesn't someone really show me up by posting a note explaining the -0.4% claim and putting me in my place? That's a $5.78 gap-down open (0.4% of 1447), and would be quite obvious on the chart. Had it actually happened, which it didn't.
Vote me down all you want. The fact remains that ZH has once again been proven to be 100% full of shit in their PM reporting. Sorry if it doesn't feel good, but that's the fact, Jack.
xPat
I am not downvoting you but I do remember you getting absolutely dismantled on here a few weeks ago. Who was the CME guy you proclaimed to be all knowing and then someone stuck a youtube up your ass of the same guy claiming the opposite of what you said? I don't remember but it was embarrassing for you.
Unless that wasn't you. But I am pretty sure it was.
Take that.
I'm pretty sure it WAS me, and no, I wasn't embarassed. Not sure what YouTube we're talking about. What I remember was posting something pointing to Jeff Christian's debunking of another silly ZH article, then all the goldbug retards coming into an uproar about ABN Amro or something completely unrelated.
No embarassment here, but you can think whatever you like.
xPat
Someone actually posted a youtube of that Christian dude saying the opposite of what you said regarding the gold market. Then you ended up just throwing out insults and logging off. Whatever. No biggie.
No, you're completely clueless. I don't remember what was posted - probably Jeff's 100:1 comment at the CFTC Silver Manipulation hearing, which GATA has tried and tried and tried to reframe as having something to do with leverage, which it never did.
I don't remember seeing video posted, so I had probably given up on the lack of knowledge and intellect in the thread and just moved on at that point. But for the record, Jeff's statements didn't in any way, shape or form refute anything I said.
Respectfully, it sounds like you just have no clue what you're talking about, Sir.
xPat
Akak if you are around and remember who posted that vid, jump in here. It ended up with you bailing off the thread because your own guy made you eat your own words.
That you are saying you don't remember the video being posted, but you are explaining his comments in the video that you don't remember being posted pretty much says it all.
Fonz, I do vaguely recall the conversation, but I cannot now remember who posted the video, or exactly what its contents were --- but I am pretty sure that it involved Jeffrey Christian making some dishonest or misleading comment(s) regarding the gold market (but does he make any other kind?).
Fonz, he's talking about Friday's open prior to the monkeyhammering.
He may be absolutely right about Friday's opening. He was getting junked (not by me) and wanted to know why. My guess was, some others, like me, remember the thread I was referring to, which did not work out so well for him.
Tee hee he
I was just being facetious.
Monkeyhammering.
Technical term of art, methinks.
I didn't down vote you, but I'll bite -- are you saying that the futures market quote did not reflect the small gap down? You wouldn't be the first to tell me that my eyes are liars, but I saw it.
Lter
http://www.bostonglobe.com/metro/2013/05/10/mysterious-low-flying-planes-bother-quincy-residents/AcMy0ViD7xGvslkQJekr6K/story.html
The planes are apparently registered to a company in Bristow Virginia, which happens to be the home of the CIA office of public affairs. Coincidence I'm sure.
There was no discernable gap-down in /GCM3. The market opened at 1447.70, within a tick or two of Friday's close, and I transacted an order in my own account at 1447.40, as noted earlier. For this bit of ZH nonsense to have been true, the market would have had to have opened at 1442 or so.
I wish I could post a screen capture of the actual futures chart showing friday's close, today's open, and my trades. The tape don't lie, foks. Only ZeroHedge does that habitually when it comes to PMs.
xPat
Cut and paste from sgxnifty at 7:30 pm Eastern time (U.S.) Sunday.
Gold (Spot) 1440.24 1440.49 1440.24 -7.94 -0.55 1449.60 1439.18 19:29:57Here's the m-1 xau spot open (screen cap). on one of my platforms.
[IMG]http://imageshack.us/a/img10/4743/xaum1.png[/IMG]
I welcome your opinion, my online charts must be a bit off then. Any correction is welcome in my view!
It is our God given right to give red arrows to any douche-bag we choose. I think it's in the Bible or the Constitution or somewhere else maybe. This is Fight Club, thicken up your skin a bit.
Today Previous
Yield 3 Month Treasury 0.03% 0.03% 10 Year Treasury 1.90% 1.81% 30 Year Treasury 3.10% 3.00% 3 Month Libor 0.47% 0.28% Did 3mon Libor really go up +68% in a day??
17 shot during a parade at New Orleans.
http://www.wwltv.com/news/crime/Several-shot-in-7th-Ward-207120471.html
Oddly on Mother's Day...hmmm...who's your mama?
Gold futures are trading@ $1440
we all know that by say around 11 pm eastern time, if not before, the u.s futures will be as green as grass.
these fuckers r prob trying to get our hopes up, but we all know how this ends. tomm we set new all time highs, with no volume whatsoever.
maybe 1 day this week we will get a -100 plus day on dow, only to be followed up by a 200 plus day on dow on absolutely no news and no volume.
I am getting dizzy with all of this reverse understanding of words and incessant deception.
I think I will steady myself by hanging onto the handle of the safe holding my AuAgPb.
That always helps.
Yes
The "taper" chatter is not unlike the trial repo transactions nonsense the fed trotted out a year or more back, to lend credence to the notion that QE would stop at some point and thereby paradoxically strengthen QE's effect.
This is even more pathetic since it is just talk but eve if they taper for a month or two, the purpose will be to strengthen the resumption of QE.
Without the flow all will stop.
Japanese 10yr yield up 5 bps today.
If that finally cracks...YIKES
Interesting that the Aussies just announced a rate decrease and yet their bonds are exploding lower (yoelds increasing). Perhaps these guys are starting to lose control of their paper. I felt that this was a story lost by everybody on Friday. Yields across the globe exploded with the exception of Greece, in a textbook, perfectly logical flight to low quality. JGBs are in complete freefall regardless of market limit stops. Why gold would selloff in this environment is further confirmation of bizarro-economics.
Australia could be (no wait..IS) a real PROBLEM...And I mean a BIG problem..!! and is a good window DIRECTLY into China's real story (and it ain't pretty..)
ps Gold is falling because "The Collaborators" NEED it to fall...before new currency regime...'risk assets', too...BUT, we ain't seen nothin' yet.
Betting on the reversal of QE is probably not going to be successful.
The market is levitated because QE causes economic expansion, which causes revenue expansion, which causes profit increases.
The real falling knife will occur when everyone realizes that QE does not cause those things, and the market is way, way ahead of the underlying economy.
According to Deutsche Bank:
http://fs1.hidemyass.com/download/mrO2Y/adaqnrrv5bi21c176ems987q84
The lack of confidence in final demand that seems to justify corporate reticence has a mirror image in the financial sector’s liquidity trap – the fact that corporates prefer to save and not to leverage and invest. And it seems reasonable to justify the lack of confidence in the context of ongoing and unresolved fiscal tightening; household savings rates that are “naturally” capped not to go to zero or below this time; and a global sector that seems decidedly weaker. In other words, of all the Keynesian circular flow of income external drivers there are none doing any driving except corporate investment. But the Catch 22 is that corporate investment itself is restrained by the fear for the lack of the other drivers! The answer might be waiting for a pick up in the external sector; it might be seeing through the fiscal austerity and or at least suspending or reversing some of it; or it might be further improvement in the household balance sheets via housing. However all of these likely need time.
In this context we can then handicap central bank reaction functions. While we wait for something to give positively in favor of a stronger recovery, policy stays unusually easy. This then creates the dichotomy of buying more time in the near term through easier policy to deliver a proper recovery whilst potentially running the risk longer term of too much inflation the other side. The pent up monetary stimulus that exaggerates a liquidity trap now becomes a challenge to control on the other side. This schizophrenia has been played out numerous times since 2008. And it defines the unusual dislocation between ultra low real yields and high inflation expectations (inflation risk premia) that is also known as financial repression. Financial repression being one of the metrics that is supposed to encourage more risky lending and to break the liquidity trap.
The consensus of course is that after a certain amount of financial repression, the world will sufficiently improve and central banks have the tools to contain inflation so that the bulk of financial repression is contained to ultra low real yields rather than ultra high (realized) inflation. In this spirit Bernanke and now Kuroda are extremely confident. However we would actually go one stage forward. In the current low growth equilibrium there is a good chance that there is jolt to higher growth because the fiscal dynamics can never be resolved. This is particularly true for peripheral Europe and Japan; less true for the US but then partly depends on the willingness to address structural contingent liabilities. Absent that, the US might well be in the same boat as the others. In this case, the only solution is for the central banks to end up holding the majority of government claims and to consolidate their balance sheets with the government. In one fell swoop, cumulated deficits that may stretch back several years are ex post deficit financed. This would almost certainly break the liquidity trap in that it would represent a massive relief to expected fiscal tightening for the private sector. The central banks would quickly need to use their “tools” to contain a splurge in lending and control inflation. Ex post however there is no reason why inflation would materially rise, as long as liquidity was tightened commensurately with the debt relief implied by consolidated balance sheets of the central banks and the government. Moreover if G3+ acted synchronously, at least for the currency majors there may be little fall out.
So the interesting question is why not? Is there any cost of consolidation when we are otherwise in an eternal liquidity trap? The answer is, unfortunately yes. This would have to be a one shot game. Going forward governments’ would unlikely be able to borrow from the private sector for a long long time precisely because it threatened financial repression, even if only in the kind of negative real rates ex ante rather than even more negative ex post. Instead, government would be obliged to run balanced budgets. These authors don’t think this is necessarily a bad outcome. However it does mean that if and when consolidation comes, as much as possible needs to be consolidated otherwise fiscal policy would be on a perpetual tightening path to run the extant liabilities down. If you are going to consolidate, do it big because you are likely to have only one chance. It may seem extraordinary to think about consolidated balance sheets but there are plenty of examples in history, particularly during wars, of deficit financing. And however outlandish and non consensus it is, remember that a few years ago we talked about QE never ending, which at the time was also outlandish. Consolidation sounds an anathema to consensus but it is a logical conclusion to the liquidity trap and the probability rises each day that growth disappoints.
According to Bank of America Merrill Lynch:
http://fs1.hidemyass.com/download/h8Cqx/1s3nkvl62fipb7krsefh0bajr1
Easy Fed policy: too much of a good thing?
The costs of easy Fed policy
Fed policy is aimed at stimulating economic activity, which involves incentivizing households, businesses and investors to take more risk. Investors have obliged, resulting in low rates, tight credit and mortgage spreads, and new all-time highs for major stock indices. But some worry the Fed is causing a dangerous search for yield that could lead to new asset bubbles and financial instability. Our assessment is that Fed policy has not led to an increase in systemic risk.
Risk-taking is good; systemic risk is bad
This piece provides a guide for monitoring financial stability and the linkages between asset markets, financial institutions and the real economy. We believe the ultimate question is whether the Fed’s policies have increased systemic risk.
This depends on the following, which we address in the note:
- Do market valuations appear overstretched and are there signs of asset
bubbles forming?
- Is there an increase in leverage in the market or an overreliance on short term funding? Would systemically important institutions be at risk of failure?
- How are the beneficiaries of easy credit using the proceeds? Are they using debt to fund risky investments, buy homes they can't afford or go on a consumption spree? Or is issuance going toward improving their balance sheets and lowering their vulnerably to the eventual rise in interest rates?
Risk transfer underway, but systemic concerns muted
We argue that Fed policies have encouraged a transfer of risk from borrowers (indebted households and corporations) to creditors (investors) who are willing to accept lower risk premiums. Increased real money participation in credit markets mitigates the systemic implications of this risk transfer. Corporate and household balance sheets are healthier, thanks in part to easy Fed policy, but signs of increased appetite for leverage in the corporate sector bear close monitoring.
Fed to stay the course
Our survey of financial conditions and systemic risk supports our base case that the Fed will maintain its asset purchase program at the current pace of $85bn/month through March 2014, followed by a 6-8 month tapering period.
QE will limit the upside in yields
The potential for a sizable rise in yields will be limited if the Fed maintains QE well into next year as we expect. We forecast a gradual rise in 10y rates by year-end.