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20 May 2014
FED to change tone - Societe Generale
FXStreet (Guatemala) - Sebastien Galy, Senior FX Strategist at Societe Generale explained that the US labour market posses a position that will likely see the Fed change its tone.
Key Quotes:
"One of the key sources of fuel for the risk rally has been the Fed. As the labour market gently tightens, the Fed will eventually change its dovish tone."
"It has been greatly helped by the market throwing in the towel on higher UST yields. The combination of a market insensitive Fed buying with a fair chunk of reserve managers and source negative rates in Europe are doing the job."
"While the signal from UST10s is misleading, housing markets no straight line up, the shift in policy is ever more likely month after month. A reversal in global liquidity can take almost 18 months to lead to a higher vol regime, nonetheless the initial reversal has some impact."
Key Quotes:
"One of the key sources of fuel for the risk rally has been the Fed. As the labour market gently tightens, the Fed will eventually change its dovish tone."
"It has been greatly helped by the market throwing in the towel on higher UST yields. The combination of a market insensitive Fed buying with a fair chunk of reserve managers and source negative rates in Europe are doing the job."
"While the signal from UST10s is misleading, housing markets no straight line up, the shift in policy is ever more likely month after month. A reversal in global liquidity can take almost 18 months to lead to a higher vol regime, nonetheless the initial reversal has some impact."