Flash: Fed tapering a gradual process – Investec

FXstreet.com (New York) - According to Lee McDarby, Corporate Treasury at Investec, “Bernanke’s recent Fed press conference words, in which he gave a steer on the likely timing of QE3 tapering and shut-down, have widely been viewed as indicating the Fed is shifting towards a tighter policy world, pushing Treasury yields up sharply and knocking risk sentiment.”

In particular, as speculation mounts, “We see fears about a rapid Fed exit as overdone, with any QE3 pull-back and broader tightening likely to be slow initially and contingent on the economic outlook, with a move on rates on ice until 2015 and then with any ‘normalization’ slow. In the words of the Dallas Fed’s Richard Fisher, we do not see the FOMC going from ‘Wild Turkey, to cold turkey’.” McDarby suggests.