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Global Macro: The Fed Doesn't Taper for Good Reason

At suppressed levels, the lack of tapering led to a heavy inflow into gold, a traditional inflation hedge, and similarly gold stocks were bid higher.

On the chart below, you can see the drastic spike in price action highlighted in the blue box. With tapering off the table for at least the next few weeks, expect this index to trend higher toward its August highs.

The next chart is of iShares JPMorgan USD Emerging Markets Bond (EMB).

Emerging-market debt has benefited from the low interest rate environment. Emerging markets carry the added risk of default and vulnerability to large outflows of funds from their economies.

Investors feared that tapering could mean a lack of liquidity for emerging economies as well as slower growth due to more expensive borrowing rates.

Now that the Fed has chosen not to taper, funds sitting on the sidelines have poured investments back into emerging-market assets.

The multi-month downtrend in the index below has been broken and prices should continue higher until the next round of tapering talks.

At the time of publication the author had no position in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Andrew Sachais' focus is on analyzing markets with global macro-based strategies. Sachais is a chief investment strategist and portfolio manager at the start-up fund, Satch Kapital Investments. The fund uses ETF's traded on the U.S. stock market to gain exposure to both domestic and foreign assets. His strategy takes into consideration global equity, commodity, currency and debt markets. Sachais is a graduate of Georgetown University, where he earned a degree in Economics.
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