The Fed's Long Unwinding Road: 3 Factors that could push bond yields beyond market expectations
The Fed's Long Unwinding Road
Quantitative easing (QE) by the US Federal Reserve (Fed) has more than quadrupled its balance sheet over the last decade, from US$900 billion to US$4.5 trillion. Templeton Global Macro believes the Fed has been using emergency medicine long after the emergency has passed.
"As the Fed unwinds its balance sheet, we should ask not whether yields will rise, but how much faster and higher than market expectations."
Dr. Michael Hasenstab
In this edition of Global Macro Shifts, The Fed's Long Unwinding Road, the team discuss the potential implications of an unwinding Fed on their road to policy normalisation and highlight three factors that have the potential to push bond yields not only higher, but well beyond current market expectations.
