It is not able the QE taper

[Secretariat]

It should be obvious that when the tapering happens, the FED would gradually withdraw from buying the long bonds.

But the price actions seen in the markets appeared to be a worry on something else, other than the fact that no one really knows how far rates would swing before normalizing.

And it is likely to be due to situations in China. (Japan? You got to be kidding...).

For those who are familiar with China history, a purge (akin to the Cultural Revolution) could be unfolding. Of course, they would call it a structural reform. When China, PBOC, is willing to turn off the liquidity tap for its banking system, it is doubtful that she would step up to buy US treasuries in lieu of the FED.

Cheers!

[indomie]

It should be obvious that when the tapering happens, the FED would gradually withdraw from buying the long bonds.

But the price actions seen in the markets appeared to be a worry on something else, other than the fact that no one really knows how far rates would swing before normalizing.

And it is likely to be due to situations in China. (Japan? You got to be kidding...).

For those who are familiar with China history, a purge (akin to the Cultural Revolution) could be unfolding. Of course, they would call it a structural reform. When China, PBOC, is willing to turn off the liquidity tap for its banking system, it is doubtful that she would step up to buy US treasuries in lieu of the FED.

Cheers!

The feds is the only buyer in town for the US treasuries. China rescuing the US is highly unlikely.