According to Robin Brooks, Chief Economist at the Institute of International Finance, the global economy would rebound, and markets would test how committed the Federal Reserve is to keeping real or inflation-adjusted interest rates low once mass coronavirus vaccination begins.
“Once we’re vaccinated, 2021 will feel like the 2013 “taper tantrum,” Brooks tweeted.
Taper tantrum was a collective reactionary panic that triggered a spike in US Treasury yields, a decline in equity markets, and emerging market currencies after investors learned that the Federal Reserve was slowly putting the breaks on its [liquidity-boosting] quantitative easing (QE) program.
The safe-haven dollar will likely find bids if we get the 2013-like taper tantrum later this year.
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