The team over at ING has put together a helpful piece on what they expect assets to do when the Fed starts tapering bonds. For the uninitiated tapering of bonds simply means that the Fed makes fewer bond purchases.

A key part of ING’s piece is looking back to 2013 when the so-called ‘taper tantrum’ occurred after the Fed started discussing the reduction of its US Treasury debt purchases. The takeaway that stands out is that gold was the big loser with a fall of nearly 20% between May 01 and September 05 closely followed by EM currencies.

Learn More: What is Taper Tantrum?
a graph explaining the taper tantrum

Size of the tantrum

In 2013 the size of the taper tantrum was 150 bps as the 10-year rose from 1.5% to 3% over the course of around 5 months. The key to a ‘tantrum’ is the speed and violence of the move. So, the key here is how far and how fast the bond yields move higher.

ING’s base case is to see US 10-year yields at 1.75% for the year-end. They recognize the risk that 1.75% could be reached in the middle of this year.


The obvious application is that commodities will come under pressure in a taper tantrum repeat. Gold will be the obvious loser, but other commodities are expected to fall. However, oil has separate drivers alongside OPEC+, etc, so bear that in mind.

Emerging markets

In 2013 the so-called ‘fragile five’ (Brazil, Indonesia, India, Turkey, and South Africa) saw a rough 18% decline against a strengthening dollar. ING sees the most vulnerable as the ZAR due to its strong gains in 2021. They also see CNY, TWQD, and KRW as vulnerable in a taper tantrum scenario. Finally, ING sees EURUSD gaining as a 2H global expansion that would favor cyclical currencies like the EUR. Also worth thinking about AUD and NZD strength too.