Fed’s Taper Start Seen as Non-Event in Poll of Investors
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An anticipated reduction in stimulus by the Federal Reserve that has roiled the financial markets for months will be seen as no big deal if it goes ahead next week, according to a Bloomberg Global Poll of investors.
Fifty-seven percent of those surveyed say they don’t expect a sudden change in the markets because investors already anticipate tapering action by the U.S. central bank. Eight percent see a rally on such news, while just under a third are looking for declines, based on the Sept. 10 poll of 900 investors, traders and analysts who are Bloomberg subscribers.
“A taper-lite seems priced in” by the markets, Greg Lesko, managing director at New York-based Deltec Asset Management LLC, said in an e-mail, referring to what he says will be a small reduction in stimulus by the Fed. Lesko took part in the quarterly survey.
The yield on the 10-year (USGG10YR) Treasury note rose to 2.91 percent at 5 p.m. in New York yesterday from 2.04 percent on May 22, when Fed Chairman Ben S. Bernanke raised the possibility the central bank might cut back its stimulus this year. The MSCI Emerging Markets stock index has fallen 5.5 percent over that time.
A plurality of those polled -- 38 percent -- expects the central bank to decide at its Sept. 17-18 meeting to start lowering its monthly bond purchases. Another 35 percent see such a step in either October or December. Less than one in four say a decision on tapering will be delayed until next year. The Fed is currently buying $85 billion worth of bonds per month.
Seeing End
The Fed began buying $40 billion of mortgage-backed securities per month in September of last year and then supplemented that with $45 billion of Treasury securities in December. Bernanke suggested to reporters on June 19 that the program might be wound up by the middle of next year.
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