Back in May, when we coined the term "Taper Tantrum [9]" before the infamous Hilsenrath article [10]was released bringing with it famine, pestilence and a full rerun of the 1994 blow out in yields [11]and when the prevailing consensus was that Bernanke wouldn't touch the rate of monthly monetization until December or even 2014, we forecast that as a result of a the declining US deficit (primarily due to a brief spike in GSE remittances to the Treasury until the closed loop of lower monetization ends any myth of a "housing recovery" and pushes US deficits wider again) Bernanke will have no choice but to taper QE by $20 billion (or else risk destabilizing an already illiquid TSY market even more) with the announcement due at the September FOMC meeting. Just to avoid any confusion, we also showed [12]just what such a September tapering would look like in the grand context of QE.
But when, and by how, much does Wall Street see the end of tapering, and what is the sell-side consensus? The list below summarizes the current view by bank.
- Goldman - Sept taper, - $20b in Tsys
- JPMorgan - Sept taper
- Credit Susse - Sept taper, -$20b via -$10b MBS and -$10b Tsys
- BNP - Dec taper w Sept'14 ending; - $10b ea Tsys/MBS; poss less MBS/more UST's
- Barclays - Sept taper of - $10b Tsys/- $5b MBS, end buys in Mar'14
- Bank of America - Dec taper but 'sizable chance' of Sept
- Deutsche Bank - Sept taper, risk of Dec
- Pierpont- Sept taper;
- BMO - Sept taper;
- RBC - Sept taper likely
- Citi- Sept announce, start taper with Oct 1 buys to $60-65b, stop in mid'14
- ING - Sept taper in Tsys;
- BTM-UFJ - Sept taper
- ScotiaBank - Dec taper
- Jefferies - Oct announce taper, go to smaller buys in Nov
- Nomura - Sept announce taper, begin taper in Q4
- Cantor Fitzgerald -first taper in Sept, of Tsys -$10B and MBS -$5B
Consensus: September tapering start with ~$20 billion in initial reduction. As we said over two months ago.
Source: MNI

