Wednesday's FOMC meeting is Ben Bernanke’s swan song, and if tapering is to be announced he would probably go out with falling bond markets, falling equities and a soaring dollar, not to mention disruption of emerging market currencies.
Based on the monthly figures to Oct. 1 recently released by the St Louis Fed, FMQ jumped $227bn in September to $12,176bn. This puts it $4,819bn and 65% over the long-term exponential trend established between 1960 and July 2008, the month before the Lehman crisis.
When the market is unsure that the U.S. government will be able to pay its debts, which include interest payments to bondholders, it make sense that the U.S. bond market might not now be looked at as necessarily the ultimate safe haven.
Gold and silver got hit badly, which tells us that investors think this is no more than overbought equity and bond markets unwinding. As long as no one is seriously considering systemic risk, they are unlikely to flock to gold or silver.
With a 40-year plus career spanning all segments of the financial industry, Bill Brodsky, Chicago Board Options Exchange executive chairman, talks about the events that shaped the modern trading landscape, his role in them, and what’s next for the industry.