“Fed Credibility In Tatters”, Credit Agricole Laments: “Market In State Of Shock”

Thursday, September 19, 2013
By Paul Martin

by Tyler Durden

The “market is in a state of shock” after the Fed’s decision to postpone taper, noted Credit Agricole’s David Keeble adding that “Fed credibility and its communication strategy are in tatters.” This, as others have noted, will make it many times more difficult to manipulate yields lower in the future as the “Fed is moving to a new way of looking at asset purchases.” As we explained in detail 15 months ago, Keeble notes the Fed appears to have clearly signaled that the degree of accomodation is not linked to size of the Fed balance sheet, but that the flow of Fed buying is “very important.”

So, it’s the flow, not the stock; and that means, as we noted here, that unless The Fed is actively engaged in monetization at every given moment, the impact from easing diminishes progressively; ultimately approaching zero and subsequently becoming negative.

The Rest…HERE

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