Krishna Memani, Oppenheimer Funds - The world's policymakers want monetary policy to be reasonably accommodative. However, they are also aware of its downside - asset price inflation. Low volatility and low rates can be a deadly combination. It seems that talk of tapering QE alone is capable of unwounding a host of trades in the marketplace. Given this, Bernanke should talk more about tapering without actually doing anything. What that means for asset prices is that, after the initial spike in volatility, the markets will stabilize but at a modestly higher level of interest rates, credit spreads and volatility. (VIEW LINK)
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