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Spot When The Fed Tapered

Submitted by Tyler Durden on 12/23/2013 16:27 -0400

While tapering in the US has had only good consequences (so far); in China it has crushed money markets. Of course, some might argue this is merely a coincidence, but since both the US and China appears to have launched their tapering together, the question is what will break to force China to pull back, since for the Fed it is all roses.

(while there is no 'direct' line of causation between a taper in the Fed's policy and short-term liquidity access in China, there does appear to be a rather strong 'indirect' correlation - as perhaps the phrase "all stimulus is fungible" comes to mind...)

Perhaps of note is that as liquidity dries up in the Chinese money markets, the US Treasury curve term structure has collapsed...

Chart: Bloomberg

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Mon, 12/23/2013 - 16:37 | 4271659 One And Only

One step forward two steps back.

Taper will ultimately lead to conditons where an increase of the 85BB p/month will be warranted.

The FED has a huge tool shed in which to deal with our problems. As it turns out that tool shed houses one tool; a printing press.

Mon, 12/23/2013 - 16:59 | 4271701 agent default

And the tools to maintain the press. Hence the need for the tool shed.

Mon, 12/23/2013 - 17:03 | 4271710 icanhasbailout

Barney certainly was a big fan of the tool shed.

Mon, 12/23/2013 - 17:17 | 4271736 SWRichmond

If printing money undermines or destroys the value of money, then it should not be done, because to do so is a deliberately destructive act.

If printing money does NOT undermine or destroy the value of money, then print us each $1Million and no one will ever have to work again.

Taper? Why? Is is wrong to keep printing? Who says so?

Mon, 12/23/2013 - 17:39 | 4271783 Beam Me Up Scotty

While you are at it, you can pay ALL of my taxes, fees and licenses too, with that freshly printed money!

Mon, 12/23/2013 - 18:29 | 4271874 Clowns on Acid

Barney's arse was no stranger to a shed tool either.

Mon, 12/23/2013 - 17:10 | 4271724 Obchelli

Looks Like current Printing Press is overheating that's why they had to slow it down little while investing in a new Press of higher Power. Wait untill both will start work in parallel

Mon, 12/23/2013 - 16:36 | 4271663 rubearish10