Agree! No formatting on text is kept by the form. The comment section could easy be improved

I am sure that anything can be improved, but the new system helps me follow replies on a single comment. I read comments from top to bottom and like to see the replies to individual comments. It saves me time in the thread. DLS

And if they happen to try shrinking, they will change their mind very quickly! Especially if stocks crash?

can you explain why will the Fed shrinking balance sheet mean long bonds? Wouldn't the fed sell the treasuries that they bought during QE, result in an increase in oversupply of treasuries, therefore fall in prices?

can you explain why will the Fed shrinking balance sheet mean long bonds? Wouldn't the fed sell the treasuries that they bought during QE, result in an increase in oversupply of treasuries, therefore fall in prices?

Used to happen with me a few months ago. Now its okay

Great insight ...thanks

Click on the icon of the guy in the bottom right, then enter your request. I had staggered videos too and was disappointed, but then I changed browsers for viewing and it's fine since then, except rarely if their server is really busy I guess. Of course you also need a good enough broadband connection. Hope that helps.

One more thing. Don't assume that asset prices will fall in US bc. of FED B/S contraction as capital flows will be the main key driver. Both the UST and US stocks can go up at the same time as happend last week due to rising dollar

What they "say they will do" is intended to influence through verbage. So either ignore it, or try to interpret the verbage down to every word as is argued on CNBC. I ignore their lip service because it's not been worthy of prediction in the past.

We can consider what data the FED looks at, even if it's not the data the rest of us would use.

Wow, my assumptions were challenged in 2 minutes...

One thing I'd like to say, do you believe the effects of BOJ and ECB QE is the same as the US? I.e. increases bond yields and investment into risky assets? I don't think this is the case, but happy to be proven wrong.

With regard to ECB QE leading to rising rates: taking the German 10yr as the benchmark, it is difficult to say. Taking the start of the SMP in 2010, 10 bund yields fell for the first 3 months, but then rose for the following 6 months before falling again, ending at a lower rate and the end of SMP than where it started at the programme's outset. Soon after the start of APP, bunds sold off before rallying - and are now flat compared to levels at the start of ECB QE. Also, rallying periods could just have been safe-haven flows as peripheral European debt sold off. Looking at Yield vs Inflation vs ECB balance sheet, and focusing on the APP period (Mar 2015-present) then the situation is a bit clearer: the yield spread to inflation has declined and gone negative as the BCB's B/S has grown. Also, since 2007, there is a pretty strong negative correlation between ECB B/S size and the yield spread to EZ inflation. Nevertheless, one must not ignore the fact that in the near aftermath of the start of both SMP and APP, 10yr bund yields rose, and have been essentially flat / range-bound through APP.

Really liked Julian's clear presentation. Perhaps he could comment on implications for European corp and sovereign yields in view of QE.

they will never do it

Never say never, especially if we see a new Chairman with a different agenda.

As I said I'm very worried that Trump who said 'I don't like rate hikes' will pick a replacement for Yellen who favours BS reduction over rate hikes. It will be a s*** show!

Julian, I like those frames. Where did you pick them up?

Interesting thoughts. One thing I have also always wondered is: why is the contrary never considered? I.e. raising rates & expanding the balance sheet? Or has something like that happened in the past?

Andrew yes it helps without Q. But think of it this way. As the reserve currency $ QE is heroin and BoJ or ECB QE at best methadone. Yes it works domestically but on an international basis the efficacy of their QE can be mitigated by FX moves i.e. ECB blows out the balance sheet by 20% but Euro drops 20% then in $ terms you have zip.

So the key take aways will be to. Look for IR up in US, and more importantly balance sheet reduction. Will cause a rally in bonds sell off in risk assets, especially EM. This will be mitigated if the US does not raise or decrease balance sheet. Watch for US swap timing to determine "how late" the fed is to the rescue? Timing most likely over the coming six months. Could also trade currency hedged European/Japanese equities(as a USD investor).

Absolutely!

Neither is Julian by the sound of things... ;)