2013 Taper Tantrum
Beginning of year 2013: After QE3 was initiated, front rates priced close to zero probability of rate hike for the following three years despite of improving economic outlook and rising asset prices. With the anticipation that US rates and rates-sensitive positions would be highly vulnerable to repricing of monetary policy, the portfolio was positioned via underweight to long-duration IG credit within fixed income portfolio and underweight to EM equity within global equity portfolio. The sudden rise of US rates and the shocks to the capital market after Fed signaled the tapering of QE was known as “Taper Tantrum”.
Q3 2013: Re-deploy capital to increase exposure to US equity as Fed turned dovish after Taper Tantrum while economic growth outlook was improving.