Get set for a rocky ride

The great money-printing experiment looks ever more likely to be heading for a messy end.

"The next few months promise to be particularly tricky and volatile for markets," says Pimco's Mohamed El-Erian in the Financial Times. The jittery political backdrop, with military action in the Middle East, Germany's upcoming election on 22 September, and Italy's coalition hitting trouble again, doesn't help. But the main threat stems from central banks.

The attempt to drain all the liquidity they have flooded the markets with in recent years (through quantitative easing, or QE) is fraught with risk. "Wall Street is showing itself loath to give up QE3, even gradually," says Randall W Forsyth in Barron's. Hints from Federal Reserve chairman Ben Bernanke that the Fed will merely seek to buy fewer assets with printed money as opposed to stopping QE altogether have still sent both stocks and bonds lower.

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