Taper tantrum - Taper Tantrum Definition

Treasury yields, after investors learned that the Federal Reserve was slowly putting the brakes on its quantitative easing QE program.

Before moving to New York, he reported for MarketWatch from Frankfurt, London and Washington, D.

Traditional economists would insist that when the Federal Reserve feeds the economy for too long, there are unavoidable consequences.

Reverberations of the sharp rise in US yields were felt in the global rates market and eventually spilled over to , including those in emerging markets EM.

GRAPHIC: Federal Reserve bond holdings -.

Higher borrowing at low interest rates in turn helps companies tide over short-term disruption to demand for their products.

What Caused the 2013 Taper Tantrum? A taper tantrum refers to the movement in bond yields caused by investor reactions to a central bank announcing future.

While investors typically react to any central bank news, the strength of their reaction depends on whether the news is expected or unexpected.

It is not intended at delving into the finer, more nuanced aspects of the monetary economics — which is better left to monetary experts.