Like many workers in the financial industries, Mr Market is beset by phobias. Whilst ordinary mortals might fear spiders, snakes, sharks, and all manner of other creatures whose name begins with the sibilant syllable, Mr Market’s fears are more monetary. Yes, dear reader, our beloved commentator has a debilitating fear of monetary policy changes enforcing a reduction in quantitative easing, known as tapering. This week, Mr Market had his very own taper tantrum as the Fed announced an end to its half-decade round of quantitative easing, judging the American economy to have enough juice now to make a smoothie without assistance.
As Mr Market was taking to his bed in a state of ardent distress, the markets themselves reacted with insouciant shrugs to the news, dispelling memories of their own taper tantrum over the summer. Once again, homogeneity between central bankers is gloriously absent. As the Fed moves to a more hawkish stance, Sweden and Japan are being forced into a dovish forbearance, with one reducing its interest rates back to zero and the other announcing a huge round of monetary base expansion through asset purchases. Markets surged ahead, but if last-ditch attempts to prime the economic pumps fail, Mr Market will not be the only one cowering under the sheets.