Quantitative Easing and the Bond Market
Of all the markets in the world that are being affected by the policy of quantitative easing (QE) tapering, the bond markets are the most affected. This is because the policy rules mandate that the primary investments being made by the government as a result of the money created must be in the bond markets. As a result, a massive amount of money is entering and leaving the bond market based on the changes in this policy.
In this article, we will have a closer look at the effects of both quantitative easing (QE) as well as quantitative easing (QE) tapering on the bond market.
Effects of Quantitative Easing
Quantitative easing (QE) has many effects on the market. The foremost ones which have the highest impact have been listed in this article.
However, in the recent past, the bond market is being driven single handedly by expectations regarding the quantitative easing (QE) policy. The interest rates have literally taken a backseat wherein quantitative easing (QE) is running the show. Now, the quantitative easing (QE) policy is highly unpredictable. As a result, the bond markets fluctuate wildly before any major announcements by the Fed, European Central Bank (ECB) or any other authority.
Effects of QE Tapering
Like quantitative easing (QE), quantitative easing (QE) tapering also has many effects on the market. Some of the major effects of quantitative easing (QE) tapering are as follows:
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