Welcome To The “Pre-Taper” Tantrum

Back in 2018, the Fed tried to moderate its post-Great Recession emergency policy of low-interest rates and torrential money printing. It reduced (or tapered) its asset purchases and, in a series of tiny steps, boosted short-term interest rates by about one percentage point.

pre-taper tantrum

And the financial markets, by then addicted to easy money, threw what came to be known as a taper tantrum.

pre-taper tantrum

The Fed immediately backed off and started lowering rates, culminating with a plunge to zero when the pandemic hit.

pre-taper tantrum

But those simpler times — when the Fed actually had to raise rates to elicit a backlash from the financial markets — are apparently over. Today, all it takes to panic “investors” is a few sentences about maybe possibly tightening just a smidge at some indeterminate date in the future.

Last week, for instance, the Fed directed its trail balloon specialist, James Bullard, to find out what the markets think of slightly less money printing in late 2022. Here’s how MarketWatch covered his comments: 

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