JUSA - Complacent Times

• Equities wobbled a bit midway through August, but they have since regained their mojo, all but confirming that the bull market in equities remains strong and unchallenged.
• A reduction in the pace of QE is coming, in both the US and Europe. Indeed, the pace of asset purchases already has slowed after surging in the initial phases of the pandemic. Overall, however, the risks seem balanced.
• Monetary policymakers are keen to stress that tapering is conditional on the continuation of the recovery, and loose financial conditions, hinting that the policy put is alive and well.
• The uncomfortable question for markets is at what price in equities and bonds will central banks perform a U-turn? No one knows, not even policymakers themselves.

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