Steven Wieting from Citi Global Wealth says a repeat of the 2013 “taper tantrum” is unlikely given the current market conditions and long-term inflation expectations.
'Normalisation' is a word which flowed out of the US financial crisis which remains to be explained and understood fully, perhaps never. There are only 3 financial asset classes - money, bonds and shares. The crises were concerned mainly with the money markets though of course the other 2 did not escape the carnage. What does it mean to have a money market crisis? It means the money markets don't work anymore - they do not deliver what people want from Cash i.e. low risk and low return. This is why the FED and other central banks had to re-liquidate the financial system in order to provide a system which served society (transactions, store of wealth, unit of account) instead of serving institutions which benefited from a close to chronically sick system. The FED process remains in place so we are a long way from any kind of 'normal' other than a 'normal' which averages the conditions of 13 years of crisis. Those of us who still remember porridge for breakfast remember that 'normal' meant an upwards sloping yield curve with the short end giving you some hope of a small, real return and the long end giving you some reward for saving for that long. Please tell me you mean that kind of 'normal' because I just can't see that kind of normal in today's reality - whether Harvard, Yale, Oxford, Cambridge, Stamford, and brilliant institutions everywhere - WHAT IS NORMAL???
