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FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale is keen to emplasis that tapering is not tightening, and kicking the can down the road is a European policy tradition.

Key Quotes

“Today’s FOMC statement may seek to do the same thing with expectations about Fed policy by kicking the curve down the road.”

“I expect another discourse on why ‘tapering’ is necessary, and likely to start this year. But ‘tightening’ i.e., raising rates, is not the same thing at all and is dependent on how the economy pans out.”

As long as the unemployment rate is too high and the inflation rate is too low, the Fed is happy to wait and even happier to see the yield curve price higher rates, just as long as they only do so in the distant future, especially in the wake of a likely soft Q2 GDP gain today, this will avoid any upward pressure on short-dated rates (globally).”

“I think the best ‘value’ is still to be had by receiving at the front end of the Euro curve, where 1yr/1yr is well above mid-May levels”.
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