QT to reverse QE and 2-year transition period to soften Brexit

There had been substantial anxiety in capital markets community about the day the US central bank would announce the reversal of its monetary policy of quantitative easing (QE) towards quantitative tightening (QT). Well, the day came and went, and it has still been a good week for investors. Stock markets remained positive and bond markets remained calm.

US Fed announces QE reversal: Trading inflation for employment?

The US Fed’s announcement this week to begin reversing quantitative easing (QE), imaginatively referred to as quantitative tightening (QT), was of little surprise to us or the markets. Neither was the Fed’s tentative approach to the start of its liquidity reduction programme – effectively reducing the level of QE stock on its balance sheet by ~ $10bn per month.

A Chinese party congress that matters

The Communist Party of China is preparing for its National Congress next month, an event that will define the direction of the nation’s politics for the next five years. The congress will be the party’s 19th, and will see top leadership positions change hands at all levels of government across the country. It is widely expected to be a consolidation of power for President Xi Jinping, who will likely be left without any major political rivals after the five-yearly congress opens on October 18.

Toys “R” Us bankrupt – end of the ‘lazy economy’ era?

The news of Toys “R” Us’ bankruptcy of at the start of the week took many by surprise, including it seems, its suppliers. However, there may be a bigger story in play around the demise of easy money ‘zombie’ companies, than what some might simply view as the 3 rd largest retail bankruptcy in history, a result of high post-LBO (Leveraged Buyout) debts and crushing competition from Amazon and online retailers.


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