Tue, Oct 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Fed’s QE3 is not creating bubbles in asset classes

Tuesday, July 02, 2013

Benedicte Gravrand, Opalesque Geneva:

Robert Schumacher, Head of US Fixed Income at AXA Investment Managers, recently shared with Sona Blessing on Opalesque Radio his interpretation and analysis of the Fed’s Monetary Policy Path and its impact on the economy and asset classes.

He explains the objective of quantitative easing (QE) as "a theoretical approach to when interest rates really can’t go below zero. The concept is to provide liquidity into an economy through outright purchases of securities. But it also has another facet to it. That facet is to remove duration risk and interest rate risk from the current holders of the securities that the central banks are looking to issue. In other words, they will sell them those securities because they are ready heavy buyers for those and then take the proceeds from those sales, and perhaps reinvest those into an area of growth or other investment that is in line with what the central banks would like to see as they move the economy forward."

When the Fed announced QE, the reaction in the safest assets, such as the U.S. government securities, was a rise in interested rates, he notes. The reason why, just when the Fed was stepping in to buy those securities, is that the Fed was trying "to encourage investors to take more risk," he continues. "Therefore owning the risk-less assets does not m......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Regulatory - David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge, Carried interest tax: How much does it matter?, Odey sees 'terrifying' mix in MiFID, tapering, asset values, Hedge funds come together to share cost of MiFID and research, SEC turns up the heat on U.S. investment advisers, India's Sebi asks hedge funds to report investments in commodity derivatives[more]

    David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge From CNBC.com: David Stockman is warning about the Trump administration's tax overhaul plan, Federal Reserve policy, saying they could play into a severe stock market sell-off. Stockman, the R

  2. North America - Puerto Rico rejects loan offers, accusing hedge funds of trying to profit off hurricanes[more]

    From TheIintercept.com: Puerto Rico has rejected a bondholder group's offer to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico's Fiscal Agency and Financial Advisory Authority said the offer was "not viable" and would harm the islan

  3. Investing - WPP targeted by short-selling American hedge fund, Sun co-founder sells secretive hedge fund on big chip trade[more]

    WPP targeted by short-selling American hedge fund From Cityam.com: An American hedge fund has mounted a bet against WPP, the world's largest advertising group, with a trade worth almost £90m. Lone Pine Capital has built a short position worth 0.51 per cent of the FTSE 100 company,

  4. Hedge funds up as industry adjusts to rising rates[more]

    Komfie Manalo, Opalesque Asia: Hedge funds have reshuffled their portfolio after nearly four weeks of rising rates as the Lyxor Hedge Fund Index was up +0.2% from 19 September to 26 (+1.1% YTD), fuelled by strong results of global macro funds, Lyxor Ass

  5. Manager Profile - How the world's hedge fund king used 'idea meritocracy' to become a billionaire[more]

    From Forbes.com: In 1982, Ray Dalio made what he calls the biggest mistake of his life. He made a bet that there would be an economic collapse stemming from a debt crisis. And he was wrong. He lost money. He lost his client's money. He had to let people go from his firm and borrow money from his dad