Forget data and rhetoric, Fed liquidity's the only show in town | Forex Factory

  • Forget data and rhetoric, Fed liquidity's the only show in town

    From reuters.com

    For all the fevered speculation about when the Federal Reserve will begin scaling back its monetary stimulus, market volatility has been taking a leisurely nap, suggesting investors see no major shocks on the horizon to derail their bets. Low market volatility is a sign markets expect no "taper" any time soon, or that they are steeled for a reduction in the pace of the Fed's bond-buying if it comes. The sting of the taper has been gradually sucked out of markets since the Fed's surprise decision not to start withdrawing stimulus in September. Since then, implied volatility in U.S. Treasuries, stocks and key dollar ... (full story)

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Pip Anon
Nov 18, 2013 10:40am
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Germans had plenty of money to play with during that time.

So, there is no inflation... is deflation any better?

We are already seeing bi-lateral trade agreements in Europe and China to side-step the dollar.

If this grows the dollar is gonna hurt.
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lumesh
Nov 18, 2013 1:59am
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Quoting Pip Anon
Very true. I didn't read the article, but it doesn't matter the illogic of Yellen. March onward to hyperinflation!

hyperinflation is not that likely.

FED buys treasuries which keep the yield down. Lower yields accross the board gives consumers more money at hand which will lift the demand. Higher demand will turn into higher prices AS LONG as consumers have that "exess" money to lift the demand (and thus prices) further. Any increase in prices will have negative impact on consumers pockets which acts as a backstoping tool for further increase in prices.

I see hyperinflation possibility only when there's REAL loss of confidence in the U.S. Which will be anticipated by the collapse of the bond/currency market.


Other than that i agree with the title.
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Pip Anon
Nov 17, 2013 11:53pm
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Very true. I didn't read the article, but it doesn't matter the illogic of Yellen. March onward to hyperinflation!
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