Income
U.S. Treasury Yield Curve
Investment Selector
A Sampling Of What Is Currently Available Through Stifel
Source: Bloomberg
Bond Market Comments
Our research correspondent believes the key challenge for the
Federal Reserve in 2014 is to scale back the magnitude of its
asset purchase program (QE3) while fortifying its forward
guidance on low policy rates. They contend that the Fed cannot
continue purchasing MBS and Treasury debt at the current
$85 billion/month pace indefinitely, as this would risk taking
out a potentially disruptive share of debt issuance. But even as
it addresses these technical issues, the Fed still needs to convey
its intention to maintain a highly accommodative policy stance.
Our research correspondent’s base case is for the Committee
to announce a modest initial $10 billion taper early in 2014,
perhaps in January. They have penciled in a series of tapers
of increasing intensity, with an end to QE3 in September
2014. Another possibility is that, having whittled down QE3
to perhaps a quarter of its current size by next summer, the
Fed may choose to continue small and variable “maintenance
doses" of asset purchases through year-end and maybe into
2015. This idea warrants greater consideration if and when
Janet Yellen assumes the chairmanship, as it is our research
correspondent’s view that she would have a tendency to make
smaller, more frequent adjustments to policy than did Ben
Bernanke.
