Poll analysis


All eyes will be on Federal Reserve Chairman Ben Bernanke at the upcoming Fed meetings Sept. 17 and 18. Since the Fed first indicated interest in "tapering" off bond purchases in May, the U.S. Treasury yield curve has shifted upward by more than 100 bps -- increasing mortgage rates by a commensurate amount. The Fed's interest in tapering appears driven by an apparent recovery in the U.S. economy, particularly in housing. Housing prices continue to increase (up 12% annually as of July), creating hopes that the economy will move more firmly to self-sustaining growth. Nevertheless, mortgage applications are down about 50% from where they were just before the taper was announced (in response to higher mortgage rates). Finally, the exit from the Fed's unprecedented policy response to the financial crisis of 2008 is now being put to the test. So we asked investors if they think the Fed will follow through on the taper. Of 780 respondents, 63% expect the Fed to follow through with the taper and the remainder expect the Fed to hold out. -- Ron Rimkus, CFA, Content Director, CFA Institute

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