Federal Reserve

ECONOMIC OUTLOOK

The heavy sell-off in the US treasury market over the past two months could force the Fed to postpone its plans to begin reducing its asset purchase programme, according to Henderson's John Pattullo.

The price of gold has continued its decline, falling below the $1,200 mark on Thursday for the first time since August 2010.

Mike Riddell, bond fund manager at M&G, has warned if emerging market debt outflows continue at their current pace or worsen, the effect on the asset class is likely to be "cataclysmic".

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.