Flash: Fed QE removal major threat to global economy - Nomura

FXstreet.com (Barcelona) - Richard Koo, chief economist at Nomura Research Institute, shared earlier Tuesday a research note in what seems to be a rather logical thought, implying that the global economy is at risk as the Fed mulls scaling down QE.

Key Quotes

"The Fed’s decision to end quantitative easing—and the resulting outflows of capital from emerging economies and corresponding difficulties for the economic authorities in those nations—was discussed at the recent G20 meeting. The impact of rising interest rates is also starting to be felt within the US."

"Last week the yield on the 10-year Treasury note touched 3% in response to Fed indications it was ready to begin scaling back its purchases of Treasury securities. If the Fed were to stop buying altogether or, worse yet, to begin selling the bonds it holds, I suspect we would see a much steeper rise in rates."

"That scenario will remain a major threat to the global economy over the next few years as central banks try to wind down their quantitative easing programs."