Ye Tan: Don'T Worry Too Much About The Fed'S Withdrawal From QE.

Don't worry too much about the withdrawal of QE from the Federal Reserve. It should be worried about the global downturn in the real economy.

According to the minutes of the June monetary policy meeting of the Federal Reserve, if the US economy continues to operate on the right track, it will terminate its massive asset purchase plan in October this year. At present, the US economic data are very "correct" and the possibility of exit is very great.

The US Federal Reserve continues to retain QE just to appease the symbolic movements of the market and scratch the market itch with feather. More than two years ago, when the QE was launched, the Federal Reserve bought $85 billion a month, which is now only $15 billion a month, which is only a drop in the bucket compared to the trillions of dollars in market size and volume. The key is whether the US Treasury will withdraw at the same time.

Quantitative easing and depressing bond yields are mainly aimed at increasing liquidity and lowering lending rates. The Central Bank of the world has succeeded in doing so. In the past month, although the rate of return has risen slightly, it is still at a low level. Beijing time in October 27th, the United States 10 - year Treasury yields 2.2783, one - year Treasury yields 0.1006. Now that liquidity has been restored in financial markets, the deposit rate has been reduced to 0 without the US Federal Reserve forcing the market.

Global quantitative easing has led to a sharp fall in yields of treasury bonds, forming a huge bull market bubble in the bond market. At present, no central bank has eaten a leopard and dared to take the initiative to pick up the bubble. The yield of 10 year treasury bonds in major countries is as follows: Japan 0.462%; Germany 0.890%; the United States 2.285%; Britain 2.229%; Australia 3.291%. Even if the Fed withdraw from QE, other countries will continue to maintain quantitative easing policy. bull market It will not be easy to dissipate. Taking into account the downturn in major economies such as Europe and Asia, it is unthinkable that the Fed will not win the support of its brothers at the beginning of the operation.

The US Federal Reserve has already carried out a practical exercise, and the US will not dare to drastically raise interest rates. In October 15th, due to the poor economic data released and the Ebola virus's risk aversion, coupled with the expectation of the Fed's interest rate increase, the investment institutions entered the bond market to avoid risks, resulting in a sharp rise in the bond market price by more than 30BP. As short positions were squeezed, investors had to sell liquid stocks in order to make up for the short positions, resulting in the stock market running up and down on the bottom two days on 15 and 16 days. The S & P 500 index went out at the bottom of the valley in October 15th, and came out of the cross star on the 16 day.

The market shock will make any central bank fight bravery. The Bank of America Merrill Lynch reported that if the US stock market fell further by 10%, the Fed would really have to implement the fourth round of QE policy.

US mortgage rates may rise to prevent a new round of real estate bubbles, but the Fed's low interest rate plan will not change. In September 13, 2012, Federal Reserve The Federal Open Market Committee (FOMC) announced that 0~0.25%'s ultra-low interest rate maintenance period will be extended to mid 2015. Now that the market has approved MBS and all kinds of bonds, the Federal Reserve can create liquidity through repurchasing collateral from financial institutions, and more and more hot markets can create liquidity through pledge repurchase assets. The Fed's withdrawal from QE will not affect market liquidity, and the low interest policy is still sustainable.

In the long run, a new era has begun and the global economic map will be rebuilt.

The US took the lead in getting rid of the shadow of the subprime mortgage crisis, and the US dollar entered the bull market. Gold (1228.20, -1.20, -0.10%) and oil and other commodity prices fell sharply, and the euro area was in a difficult restructuring period. The fiscal synergy and supervision among countries were like icebergs hitting each other. The first phase of the euro zone's dividend disappeared and is still in a loss period. The long-term prospects of the euro zone will not be good as long as the systems between countries collide with each other.

about manufacturing industry The same is true for the country. How to restructure the global manufacturing industry and transfer the low-end manufacturing industry to India, Sri Lanka and the high-end manufacturing industry to the US mainland? What is China going to do? Rather than worry that the US will withdraw from the QE and let the fund flow back to the US, it is better to worry about the impact of the transformation of China's manufacturing industry.

It is from this point of view that the future of China's economy has little to do with the withdrawal of the us from the QE, and it has a greater relationship with China's reform of the rule of law market.