What happens when the US tightens rates

What happens when the US tightens rates. Ambrose Evans-Pritchard says the Fed is now clearly signaling that monetary tightening is coming sooner rather than later. Janet Yellen has admitted that the Fed misjudged the pace of jobs recovery. He believes this will have serious repercussions for overseas markets, particularly those who drank deepest from the draught of dollar liquidity. The massive tide of dollars that left America when rates went to zero could now come flooding back to the US which could cause: 1) A blistering dollar rally, perhaps akin to the early 1980s or the mid-1990s and 2) A liquidity shock in European and UK banks where much of the dollar business is conducted. Such episodes can be ferocious. It was a dollar liquidity shock that turned the Lehman affair into a global banking crisis, instantly engulfing Europe in October 2008. (VIEW LINK)


Livewire News brings you a wide range of financial insights with a focus on Global Macro, Fixed Income, Currencies and Commodities.

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.