Pricing In The Taper

Equity bulls remain cognitively biased to the belief that a rising interest rate market implies growth expectations (enough to warrant a Fed Taper) that confirm the hope priced into stocks (entirely missing the bubble concerns and technical corruptions in the markets caused by these policies). However, at the very short-end of the interest-rate curve in the US, the market has pulled forward rate-hike expectations from End-2015 to May 2015 in the last month alone. The problem with the velocity of this adjustment is that in order to hike rates - the entire extraordinary asset purchase program known as QE4EVA has to be over... Still think equities are pricing that in?

 

Here's the consensus...

 


 

 

The Fed Funds futures market has shifted notably...

 

And so have Bonds and the USD (shouldn't USD be higher in 'growth' is coming our way?) - but stocks remain a little umm - ignorant?

 

Charts: Barclays and Bloomberg

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