How the bond market will react to tapering

If and when the US Federal Reserve begins to taper its asset purchase programme, how will the bond market react? Simon Fasdal, Saxo Bank's Head of Fixed Income, gives us his take. He also looks ahead to what else we can expect in 2014. Looking at European yields, Fasdal expects levels to stay low for a very long time as the Eurozone continues to be beleaguered by other issues such as unemployment and slow growth. He warns that we must be wary about deflation in the Eurozone and the European Central Bank (ECB) will act against that using every means possible. Fasdal also believes emerging market bonds will see a strong rally later in 2014. He says this is due to a very low global yield environment that will push investors to start looking for opportunities elsewhere. Latin America could offer some excellent opportunities, he says.