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Central Banks Have “Learned A Lesson”: “Silence Is Golden”

There's been no shortage of speculation about whether the Fed "got what it wanted" out of Wednesday's "dovish" rate hike. In one camp are those who believe Yellen and co. are probably pleased with the outcome. The "Fed put" (and accompanying BTFD mentality) was reinforced by the dovish messaging and this was reflected in equities rallying into Wednesday's close. Another camp thinks perhaps the committee didn't intend to effectively turn a hike into a cut and will now be forced to talk up future hikes to avoid loosening financial conditions even further. Whatever your interpretation, one thing is pretty goddamn clear: the buoyancy we continue to see in risk assets is predicated upon the perpetuation of the accommodative policies that have levitated asset prices for going on a decade. There are very real questions about what happens when the $400 billion/quarter central bank liquidity flow ebbs. In short, this is what we've gotten used to: (Citi) What happens when the spigot isn't wide open anymore is anyone's guess, but for his part, Citi's Matt King thinks maybe you should be concerned: Regular readers will know that our favourite model for markets’ behaviour in recent yea
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