Federal Reserve Is Running Out Of Credibility: BoA

Federal Reserve Is Running Out Of Credibility: BoA

“To us, there is one worrying sign in the reaction of the bond market to the better data and hawkish Fed speak unlike 2013: instead of the optimistic signal the yield curve sent during the taper tantrum, long end rates now suggests a re-ignition of the policy mistake trade.” Bank of America Merrill Lynch

Financial markets have been fixated by the day-to-day commentary from the Federal Reserve ever since the financial crisis. Indeed, ever since the crisis, markets have moved in lockstep with the Fed’s tone and is now widely assumed that as long as the Fed remains dovish, the S&P 500 will continue to rise, and volatility will be...