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Market Insight - The End of Quantitative Easing: Tapering and its Effect on Bonds and Equities - November 2013

The Federal Reserve recently kept its quantitative easing policy in place for now, but as the economy improves, the Fed will likely taper its stimulus program.  When this tapering begins, how will investors prepare for this unprecedented event?  In this paper, we demonstrate the MSCI Macroeconomic Model, exploring how economic conditions might change enough to motivate the Fed to commence tapering; we combine this analysis with the Barra Integrated Model to explore how economic improvements and tapering could affect stock and bond markets.