Market Wrong On December Taper Scenario – Nomura

Stocks and bonds dipped after Wednesday’s Federal Reserve statement, as investors seemed to think a December taper now looks more likely. But George Goncalves, the head of U.S. rates strategy at Nomura, says the market is overreacting, and that the Federal Reserve will continue its $85 billion asset-purchasing program at least into 2014.

“The knee-jerk reaction that we saw yesterday in the equity market and the bond market, and the follow-through today with what’s going on with the dollar and currency markets in general” is “really more of a buying opportunity,” Goncalves said on Thursday’s “Futures Now.” The Fed “has to keep [tapering] on the table, but that doesn’t mean that they’re actually going to pull the trigger come December.”

Still, Goncalves admits that he, too, was a bit surprised by the Federal Open Market Committee statement. “We were expecting more of a dovish spin,” Goncalves wrote in a post-statement note.

CNBC

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