Fed tapering has been in investors mind ever since May and June inflation came in much higher than expected. Last week released Fed meeting minutes indicated many Fed officials are tilted towards start tapering sooner than later. And then Dallas Federal Reserve President Robert Kaplan told CNBC this morning that he would like to see tapering of bond purchases announced in September. He said he is worried about inflation as well as financial market imbalances. This make tapering more urgent. Now, all eyes will be on Fed chairman when he speaks during the Jackson Hole Economic Policy Symposium tomorrow morning at 10AM Eastern as he will likely talk about tapering. Most economist and analysts don't think tapering will be a big deal for the stock market, however, I like what a commentator said on CNBC this morning: “Taking the punch bowl away is not going to benefit any stock because they have been benefited by easy money. ” So be very careful since the stock market is already in a bubble and the impact of tapering is likely to be much more severely than people think. Any way, below I am presenting an article from Forex.com which I thought explains tapering very well.
Fed tapering: what does tapering mean and how will it impact markets?
REBECCA CATTLIN， Forex.com
AUGUST 23, 2021 4:54 PM
Monetary policy – particularly in the US – impacts global markets. As the Fed starts to talk of its tapering timeline, we take a look at what that really means and how it could play out on US stocks, indices and global assets.
What is tapering?
Tapering is the reduction of the rate at which a central bank buys new assets. It's most commonly used when talking about the reversal of quantitative easing (QE) policies and is regarded as the first step in winding down from a period of monetary stimulus. Tapering is just another tool used by central banks to control interest rates and the perception of future rates.
QE programmes are put in place by central banks to stimulate economic growth. Once the desired targets have been met, a bank will start to reduce its acquisition of assets. Banks have to taper their spending because continuing expansionary policies can lead to over-inflation and bubbles.
For example, up until August 2021, the US government was buying $120 billion worth of assets each month in a bid to aid the recovery from the coronavirus pandemic – a program it had started in March 2020. When the US government starts to reduce the value of assets it buys, say from $120 billion to $100 billion, that would be the start of QE tapering.
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Tapering vs tightening
Tapering is not to be confused with tightening. When a central bank tapers its quantitative easing program, it reduces the value of assets that it's buying each month. When a central bank tightens its quantitative easing program, it will no longer add any assets to its balance sheet and will instead reduce the assets it holds by selling them instead.
What impact does tapering have?
Tapering impacts interest rates almost immediately. QE policies lower the interest rate, so when the purchasing program is reduced, interest rates will rise again.
Tapering leads to deflation, pulling money out of the system and making the cost of living more affordable but increases unemployment. When the money supply is limited, lenders tend to be more restrictive over who they will lend money out to and choose those that offer the highest interest rates. This selective borrowing leads to competition that can send rates rocketing.
What is the impact of tapering on markets?
Tapering often leads to'taper tantrums', which is the name given to the collective panic that follows the central bank reducing its QE program. As central banks start to buy up fewer assets, fears that liquidity would decline cause investors to fear the global market could crumble.
A taper tantrum often plays out across bond prices. And when bond prices fall, bond yields rise. There's always the potential that shares and indices could follow, since the bond market is believed to support stocks. However, in previous tapering scenarios, this has never actually happened.
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Let’s look at an example of when tapering impacted financial markets.
Examples of tapering
Tapering was first coined in May 2013, when the US Fed Chairman at the time – Ben Bernanke – stated they'd be reducing the QE program that had been in place following the 2008 financial crash. The aim was to encourage bank lending again and stimulate the economy by purchasing bonds with long maturities and mortgage-backed securities.
Once the impact on inflation had been achieved, it announced it would buy fewer and fewer assets each month in a bid to taper its program.
The statements made by the Fed caused a ripple of concern throughout financial markets as the expectation was that the reduction in QE would be unfavourable for stocks and bonds. Bond markets did sell off quite quickly in the wake of the tapering comments, and stocks started to show volatility but they both quickly stabilised. Ever since, tapering has caused less fear for investors, however it does still have an impact.
Fed tapering program 2021
In August 2021, expectations that the Federal Reserve would start to taper its buying of assets caused a taper tantrum in which commodities and global shares fell – the FTSE 100 dropped by 1.5%.
After recovery from the Covid-19 pandemic caused stock markets across the world to rally, news that US monetary policy could start to pull back led to fears that optimism had peaked. However, the tantrum only lasted a day as markets waited to see what the next monetary policy meeting had in store.
自从 5 月和 6 月的通胀远高于预期以来，美联储缩减就一直被投资者关注。上周公布的美联储会议纪要表明，许多美联储官员倾向于迟早开始缩减买债规模。然后达拉斯联邦储备银行总裁罗伯特卡普兰今天早上告诉 CNBC，他希望看到在9 月份宣布缩减债券购买。他说，他担心通货膨胀以及金融市场失衡。这使得逐渐减少买债变得更加紧迫。现在，当他明早东岸时间10时在杰克逊霍尔经济政策研讨会上发表讲话时，所有人的目光都将集中在美联储主席身上，因为他可能会谈论缩减计划。大多数经济学家和分析师认为缩减对股市来说不是什么大事，但是，我喜欢今天早上 CNBC 的一位评论员所说的话：“拿掉派对的果汁碗（减小买债）不会使任何股票受益，因为它们都正在受益于这些容易得来的钱。” 所以要非常小心，因为股市已经处于泡沫之中，逐渐缩减对股市的影响可能比人们想象的要严重得多。 无论如何，下面我将介绍 Forex.com 上的一篇文章，我认为这篇文章很清楚地解释了缩减。
美联储缩减：缩减意味着什么，它将如何影响市场？
丽贝卡·卡特琳
2021 年 8 月 23 日下午 4:54
货币政策——尤其是在美国——影响全球市场。随着美联储开始谈论其逐渐缩减的时间表，我们来看看这真正意味着什么，以及它对美国股票、指数和全球资产的影响。
什么是缩减？
缩减是央行购买新资产的频率降低。它最常用于谈论量化宽松 (QE) 政策的逆转，被视为结束货币刺激时期的第一步。缩减只是中央银行用来控制利率和对未来利率的看法的另一种工具。
央行实施量化宽松计划以刺激经济增长。一旦达到预期目标，央行行将开始减少资产收购。央行行必须缩减支出，因为持续的扩张性政策可能导致过度通胀和泡沫。
例如，直到 2021 年 8 月，美国政府每个月都在购买价值 1200 亿美元的资产，以帮助从冠状病毒大流行中复苏——该计划于 2020 年 3 月启动。当美国政府开始降低它购买的资产的数量时，比如从 1200 亿美元到 1000 亿美元，这将是量化宽松政策缩减的开始。
了解美联储
缩减与收紧
不要将缩减与收混淆。当中央银行缩减其量化宽松计划时，它会降低其每月购买的资产的价值。当央行收紧量化宽松计划时，它不会再在资产负债表上增加任何资产，而是通过出售来减少其持有的资产。
缩减有什么影响？
缩减几乎立即影响利率。量化宽松政策降低了利率，所以当购买计划减少时，利率会再次上升。
缩减会导致通货紧缩，将资金从系统中抽走，并使生活成本更可负担，但会增加失业率。当货币供应量有限时，贷方往往会更严格地将钱借给谁，并选择提供最高利率的人。这种有选择的借贷会导致竞争，从而导致利率飙升。
减持对市场有何影响？
缩减通常会导致“缩减恐慌”，这就是央行缩减量化宽松计划后引发的集体恐慌的名称。随着各国央行开始购买更少的资产，对流动性下降的担忧导致投资者担心全球市场可能崩溃。
债券价格通常会出现缩减恐慌。当债券价格下跌时，债券收益率就会上升。股票和指数总是有可能跟随的，因为人们认为债券市场支持股票。然而，在之前的缩减方案中，这实际上从未发生过。
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让我们看一个何时缩减影响金融市场的例子。
缩减的例子
缩减是在 2013 年 5 月首次提出的，当时美国联储主席本·伯南克 (Ben Bernanke) 表示，他们将减少 2008 年金融危机后实施的量化宽松计划。目的是通过购买长期债券和抵押贷款支持证券来鼓励银行再次放贷并刺激经济。
一旦达到对通胀的影响，它宣布将每月购买越来越少的资产，以缩减其计划。
美联储的声明引起了整个金融市场的担忧，因为预期减少量化宽松对股票和债券不利。在逐渐减少的言论之后，债券市场确实迅速抛售，股票也开始出现波动，但它们都很快稳定下来。从那以后，逐渐减少对投资者的恐惧，但它仍然有影响。
美联储缩减计划 2021
2021 年 8 月，对美联储将开始缩减资产购买规模的预期导致商品和全球股市下跌——富时 100 指数下跌 1.5%。
在从 Covid-19 大流行中复苏导致全球股市反弹之后，有关美国货币政策可能开始回落的消息引发了人们对乐观情绪已见顶的担忧。然而，由于市场等待下一次货币政策会议的结果，这种波动只持续了一天。
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