Comments (2013-09-18)

• I was surprised yesteryear the lack of tapering today. Tim Duy did a good project parsing the message of the Fed.  Tim points out that the Fed has created a communications mess.
  

  The downside is that at that topographic point has been a clear communication failure on the component subdivision of the Federal Reserve, too this should non hold upwards overlooked inward the hysteria that volition environs this announcement.  If they are concerned almost the behave upon of higher rates now, the Fed should accept worried a piddling chip to a greater extent than almost the behave upon of talking almost tapering 2 months ago.  They should accept pushed dorsum harder every bit the growing expectations for a alter inward policy.  The information never actually supported tapering; I scream upwards nosotros were by too large tripping over ourselves (again, myself included) to justify the path toward tapering because Federal Reserve speakers were giving piddling ground to scream upwards otherwise.

  It may hold upwards that the Fed wanted to inject a piddling volatility into the marketplace pose to forestall the buildup of excessively large positions. In that case, mission accomplished.
  

• Fiscal policy is 1 element pointed to yesteryear Tim Duy leading to the "no taper" decision. Stan Collender argues that a authorities shutdown appears to hold upwards inward the best involvement of House Speaker Boehner. It appears that this volition test damaging to the Republican political party brand, too then it would in all likelihood hold upwards a curt shutdown. There should hold upwards to a greater extent than clarity on this front end yesteryear the adjacent Fed meeting.
• The 10-year Treasury is straightaway searching for the bottom terminate of its trading range. It could hold upwards roughly electrical flow levels, but at that topographic point are in all likelihood a lot of shorts that are looking to cover. With no cardinal intelligence to key off of, technicals volition dominion for a couplet of weeks.
• Ambrose Evans-Pritchard of the Telegraph rips into High German Finance Minister Wolfgang Schäuble. The euro is non pegged to a physical commodity, too then the European bureaucrats did non completely replicate the failed Gold telephone substitution standard. This way the ECB has the capacity to boot the tin downward the route indefinitely. That said, governments along the periphery are ceasing to component subdivision inward the interests of the population, too extremist parties are moving into the vacuum. The adventure to the euro is political, non financial.

(c) Brian Romanchuk 2013