Just watched a short clip on Zero Hedge with Ric Santelli and Eugene Fama discussing tapering. Fama said that tapering would be a neutral event.
Fama’s point was that tapering is a simple balance sheet exercise whereby the Fed transfers the securities it has bought for the short term debt (deposits) it has issued. I guess in a sense, if it is a neutral exercise, the impact would be determined by the interest rate differential on the two. But it could be a lot more than this.