Federal Reserve

Bill Gross, the manager of the world's largest bond fund, has told investors selling treasuries they could be left disappointed if they overestimate the speed with which the Fed will wrap up QE.

The deterioration of liquidity in bond markets has continued apace over the past year, leaving fund managers at risk of becoming forced sellers of bonds if there is a full-scale rotation out of the sector.

The Bank for International Settlements (BIS) has warned spiking bond yields across the world threaten trillion of dollars in losses for investors and a fresh crisis for banks unless they are braced for the shock.

Enzo Puntillo, head of fixed income at Swiss & Global Asset Management, moved out of 30-year treasuries last month in his Julius Baer Total Return Bond fund as market fears grew about the possible tapering of the Federal Reserve's QE programme.

The FTSE 100 has slumped 3%, gold has dropped 5% and gilt yields have spiked to their highest level in over a year as the prospect of an end to US QE rattles markets.

Markets across the globe tumbled overnight after the US Federal Reserve announced it may slow down asset purchases by the end of the year.

US markets followed shares across Europe higher overnight, while the dollar also surged, ahead of the latest Federal Reserve meeting in the States which may map out a QE exit strategy.

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.

The Nikkei endured further sharp losses on Thursday, entering a bear market as investors sold Japanese shares ahead of an expected tapering of QE by the US Federal Reserve.

FINANCIALS