ي على قناة العربية 19 سبتمبر 2013

The Fed told us many times "tapering is not tightening". By that same logic, yesterday's "not to tapering" is "no easing". But the resulting market response certainly felt like an easing. And it will continue to do so for a while. The Fed decision to maintain $85 bn in monthly asset purchases is the latest manifestation of fiscal policy interfering with the central bank's adjustment of monetary policy. The risk of a government shutdown next month and the resulting failure to raise the debt limit could exacerbate the nascent recovery if $10bn or $15 bn were removed. Today's release of US August existing home sales hitting 5-year highs and the Philly Fed index at 2-year highs appear a valuable set of evidence in markets' data watch, but it is the labour market data, which command supremacy for the Fed. What if Yields Rose Again? Here's the Fed's upcoming trick, likely to be added into the forward guidance. So fat, the guidance has primarily focused on a threshold for the unemployment rate, but yesterday's comments from Bernanke suggested setting an "inflation floor" as a "sensible modification to the guidance". If attained, this could be a successful means of slowing down rising yields as long as falling unemployment is not accompanied by a recovery in inflation. The Fed's preferred inflation figure, core PEC price index, is at 2 ½ year low of 1.2%. Further declines nearing 1.1% could render the inflation forward guidance to become a carte blanche for further awaiting that 6.5% unemployment rate without fretting about the need for higher interest rates. For tradable ideas on EURUSD, GBPUSD, AUDUSD, USDCAD and gold, please see http://ashraflaidi.com/premium