Will the next Fed meeting’s decision really make a difference?

So now we're all on tenterhooks until 18th Sept.

So now we're all on tenterhooks until 18th Sept., when we hear if the Federal Reserve has decided to reduce, (‘taper’), its monthly bond purchases. Traders, Treasurers, pension pot holders, emerging market Finance Ministers-this is what we’ve been waiting for since Bernanke first warned us in May/June it may be coming.
However, this certainly will be no surprise-this is not 1994 with its surprise Fed hike and bond market rout. The Fed has done a fantastic job of delivering an unpopular message-the start of the end of cheap money-in a manner designed to cause the least possible market volatility, and maybe the still buoyant level of the S&P 500 is eloquent testimony to their success. The reasons for the S&P's resilience are important.
Developed market countries' stock markets have retained their poise because US bonds yields have been going up for a good reason-and that is the return of growth and optimism, not just in the US, but also in Europe and China. The rise in 10-yr US Treasury yields from 1.4% to 3.0% is best described as a healthy normalisation, as it has been driven by a reduction in the all-pervading fear which has gripped the market since the Lehman bankruptcy, first, and then the emergence of the Eurozone crisis, once the depth of Greece's fiscal mess became clear.
This basic human response to seek safe-haven has played an equally important part as that of QE in keeping yields subdued.
Only in the last six months have we started to return to the 'normal' modus operandum, in which long term yields are the sum of compounded short rates and the risk premium, the latter being investors' judgement of future liquidity, credit, and fiscal and monetary policy uncertainty over the life of the bond.
Paradoxically, desperate safe-haven flight far outweighed those factors for US Treasuries, and collapsed the risk premium. We have now returned to a normal state of affairs, with the Eurozone crisis also contained, as we all belatedly came to appreciate that political will would easily overcome any economic maladies.
This has lead me to the scary conclusion that while the FOMC's pronouncements on 18th may prompt a temporary rally in US Treasuries, (especially as there is a 50 per cent probability that they will lower the employment threshold for rate rises from 6.5 per cent to 6 per cent), but that will be a great opportunity to sell bonds.
This is a bond bear market-and companies like Verizon are very wise indeed to lock in cheap borrowing. Growth is on the rise worldwide, (even rather anaemically in Europe), and I'm afraid the Fed won't have any room for hesitation driven by concerns over the effect of tapering on emerging markets, as was made abundantly clear by a couple of senior Fed officials at the Jackson Hole conference. No wonder; the Fed-haters in the Senate would have a field day if the FOMC seemed to be managing other countries' economies for them. (Of course, those Senators give no thought for the potential negative feedback effects that an EM crisis could have on the US).
Let's say the Fed doesn’t actually taper QE at all, that will send stock markets soaring and give business confidence another boost-quickly pushing yields higher anyway.

Ben Bernanke Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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Commons confidential: The nuclear option

Hunt's six day week, Cameron's missing tweet and growing tensions within Labour.

It’s UN blue helmet time for the deputy leader Tom Watson as he struggles to keep the peace between Labour’s warring factions.

The burly veteran of the uprising that toppled Tony Blair is brokering an armed truce. His strategy, I’m told, is to persuade both sides to hold fire. Rebels remain in the bunker and Corbynistas are moving to change party rules. Either pulling a trigger would send the other nuclear.

Tensions between the Corbyn and McDonnell camps fuel rumours the veggie Jeremy may later step aside for carnivorous John. Watson, says my snout, believes Labour would be ungovernable if MPs locked the left out of any contest.

John Mann, caught glancing to check whether cameras were rolling ahead of his Brawl in the Hall with Red Ken, has posturing form. The Bassetlaw bruiser and his former colleague Denis MacShane earned blistering rebukes for “glib evidence” and “appearing supremely confident of the rightness of their positions” three years ago as witnesses at a failed employment tribunal that attempted to find “institutional anti-Semitism” in a University and College Union-backed Israel boycott.

The 45-page judgment noted: “When it came to anti-Semitism in the context of debate about the Middle East, [Mann] announced: ‘It’s clear to me where the line is . . .’ but unfortunately eschewed the opportunity to locate it for us. Both parliamentarians clearly enjoyed making speeches. Neither seemed at ease with the idea of being required to answer a question not to his liking.”

Gobby Mann and Shoot-From-the-Lip Livingstone were made for each other.

Many thanks to the reader with a long memory who reminded me this column noted in June 2009 how Jeremy Hunt was a six-day weeker, after his Surrey office informed Haslemere Rugby Club he didn’t work Sundays. Now he’s Health Secretary, screaming about a seven-day NHS in England, I’d be happy to update his availability should Hunt wish to get in touch. Emails and calls are answered all weekend.

Labour holds no monopoly on anti-Semitism. A former Labour MP recalled asking an esteemed Tory grandee, still an MP, over dinner whether Livingstone should have apologised for likening a Jewish reporter on the London Evening Standard to a concentration camp guard. “Oh no,” sneered the prominent Con, “the Hebs are getting above themselves.” The term “Hebs” is, apparently, posh for Hebrews. You learn something nasty every day.

Imagine the tweet the experts at No 10 could have prevented the football-crazy Cameron from sending: “As a keen Aston Ham fan I congratulate Leicester Town on winning the FA Cup.”

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 06 April 2016 issue of the New Statesman, The longest hatred