The Year of the Snake, 2013, has been mixed in many ways. We have witnessed some unexpected surprises while certain expectations have not come to fruition. Will this uneven trend continue into next year and beyond? Here is a recap of current trends and a look ahead.
Bond funds have had their worst year in history. Concerns over a tapering of the Federal Reserve's quantitative easing policy have driven bond values down and their yields up. This has given rise to a very high outflow of investor funds from bonds in the last half of 2013. Just look at the graph showing bond flows through 2013.
Throughout 2012, the possibility of quantitative easing (QE) tapering in 2013 also seemed to have an influence on equity market indices. In late 2012 and during 2013, markets reacted to any news of potential QE tapering by adjusting downward sharply. However, each piece of news was subsequently rebutted and there was no QE tapering at all. The Fed only confirmed on Dec 18 that a modest scaling-back in monthly asset purchases, to US$75 billion (2.46 trillion baht) from $85 billion, would begin in January.
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