Cazenove's Jeffrey: The risks of too much growth

The last month has seen financial markets become increasingly unnerved by suggestions the US Federal Reserve is beginning to contemplate curtailing the rate of quantitative easing.

It was always going to be a tricky moment. For the markets, the finesse now required is one that will allow investors to jump from one moving train to another. Ideally, of course, the leap from slowing but comfortable QE carriages would be onto the waggons being pulled by an accelerating growth locomotive. However, this will not be easy or, possibly, sensible. The impact of injecting money into the financial system has been most obvious in bond markets. However, artificially low bond yields have also helped channel money into equities (and, prior to that, into commodities). While m...