FOMC minutes ‘support’ September taper

TaperingMarkets were yesterday digesting minutes from the Federal Reserve’s interest rate-setting committee as expectations about a reduction to quantitative easing continue. Market participants hoped to get further clarity on the Fed’s tapering plans from the Federal Open Market Committee (FOMC) minutes. The minutes do appear to support that the Fed will announce the beginning of tapering in its September meeting, says Peter O'Flanagan, senior foreign exchange sales trader at Clear Currency. But he adds that “overall the signals were somewhat muddied”. Tapering will depend on the pace of growth in the economy and the data supporting it. O’Flanagan says September’s non-farm payrolls “will be huge, but the run of weekly jobless claims has been steadily declining so we do not expect any material shock to affect the taper”. He also says there appears to be some split on taper timing within the FOMC, and that there may be some compromise on the size of the taper, meaning a possible reduction from $85 billion (€63 billion) in asset purchases per month to $75 billion. The markets had called for a reduction to $60 billion. The dollar rallied and treasury yields widened, while US equity markets fell “as the supply of easy money looks to be set to slow in September”.  Martin Arnold, senior analyst at ETF Securities, says it is likely cyclical assets will suffer declines if the Fed begins to withdraw stimulus because investors expect a reduction would adversely affect potential growth. ©2013 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.