After months of speculation, the US Federal Reserve announced no change to its asset purchasing program. Global equities and bond yields had been gradually increasing in the lead up to the Fed’s September meeting. In the aftermath though, equities retraced some of their recent gains, while bonds rallied sharply. Looking ahead, with Janet Yellen set to be named the next Fed Governor, expectations of tapering may be pared back further owing to her reputation as being strongly in favour of the Fed’s quantitative easing program. Of more immediate concern is the prospect of a US default. At the time of writing, Republicans and Democrats are locked in a political stalemate over increasing the debt ceiling.
