INVESTMENT REVIEW
Tiptoeing Away From a Taper
Both bonds and equities had a good month in September,
helped by the Federal Reserve's announcement that it would not
after all immediately begin tapering its asset purchase programme,
as many investors had expected.
US
The surprising decision by the Federal Reserve to maintain the
size and pace of its asset purchase programme at its September
meeting remains a positive for both equity and bond markets in the
longer term. The Fed's reasoning for the delay appears to be
twofold. First, the extent of the surge in longer-term interest
rates since tapering was first aired back in May has clearly taken
policymakers by surprise. Any further increase in interest rates
could derail the recovery in the housing market, which was already
showing some signs of running out of steam. Secondly, the central
bank will no doubt have had one eye on the imminent and potentially
damaging showdown in Congress over the Government's
