'You might be glad of that govt bond exposure after all'

Rarely in financial times has one man saying so little had such a big impact on asset prices. If what Ben Bernanke said on 22 May – that the Fed would start reducing quantitative easing (QE) if the US economy continued to strengthen – was a bombshell, it must surely have been a neutron bomb. No blinding light but devastating nevertheless. The market has become used to clear guidance from the Fed. Ben Bernanke has said he sees this sort of guidance as an instrument of policy in itself – in effect, ‘verbal QE’. But the market may have misunderstood Bernanke’s intentions. He was not, in ...