Danske Bank - Fed Tapering to Come Already in December

Danske Bank - "Following the decent job report for November we now expect Fed tapering to come already in December. Below is quick check-list for the Fed on the recent development.

Speaking in favour of December tapering:

1. Housing data have rebounded.

2. Retail sales stronger.

3. Job growth has improved. 

4. ISM stronger. 

5. Export growth picked up.

6. Financial conditions no longer an obstacle.

7. Market now understands Fed tapering is separated from timing of rate hike. First hike now priced in November 2015 despite tapering talk.

8. Costs of QE rise the bigger the balance sheet gets.

Speaking against Fed tapering:

1. Market liquidity is thin at this time of year.

2. Durable goods orders still weak, pointing to cautious companies.

3. Hard data better but still not great. May wait for further confirmation.

4. Fiscal uncertainty still around.

5. Core Fed members (Bernanke/Yellen/Dudley) are cautious people – and they call the shots.

With the latest job data we believe the odds have tipped to December tapering. Either way it is likely to come soon as the main alternative would be January."

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Tags: Danske Bank, Fed Tapering in December 2013

Comment by Francesc Riverola on December 6, 2013 at 3:33pm

ING Bank: (NFP) figures will spur thoughts of an earlier taper – perhaps December or January. However, despite some more positive noises on the political front, Congressional approval for a budget deal by December 13 could still prove a decisive factor in the Fed’s decision on the timing of the taper. Consequently, whilst the beginning of the end of QE is a little closer following this release, it is not yet a done deal.

Comment by Francesc Riverola on December 6, 2013 at 3:34pm

BNP Paribas: With the November employment report comes with the impression of renewed dynamism: job creations above 200 000, unemployment rate below 7% for the first time in five years. However, details are not comforting (falling labour participation, no acceleration in wages, slow growth in service payrolls), and the Fed will remains unimpressed

Comment by Daologic on December 6, 2013 at 4:06pm

No taper atm.

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