Dec
11

Yield of Dreams

The recent budget deal which reduces fiscal drag, along with improving employment numbers, the likelihood of faster growth in 2014 and the fact that long-term rates have adjusted to the idea that tapering will soon start, makes me peg the probability of a December taper at 25%, up from zero last month. The Fed will couple any tapering announcement with a statement/policy reassuring markets that short-term rates will remain super-low.

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