Report
How will the bond market rebalance after tapering?
The Federal Reserve (probably in 2022) and the ECB (probably later) will reduce the size of their bond purchases, initially in order to stabilise the size of their balance sheets. We look at how the bond market has rebalanced when the central banks have bought bonds and when they have not to try to predict what will happen when they taper their purchases. Which group of economic agents will replace central banks on the buy side, and will this take place easily? We find: In the United States, high substitutability between the Federal Reserve ’s purchases and domestic institutional investors’ purchases; In the euro zone, high substitutability between the ECB ’s purchases and non-resident purchases. This high substitutability in both cases will substantially reduce the effect of the central banks ending their bond purchases on long-term interest rates.
Provider
Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
Other Reports from Natixis
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.