How much should markets fear a scaling back of QE3?

We continue to assume that the crisis in the euro-zone will flare up during the second half of this year. And we also think the Fed will scale back its asset purchases during this period, before halting them altogether in the early part of 2014. We suspect that stock and bond markets in most of the major developed economies will weather these developments quite well. But we are less sanguine about the outlook for other asset classes that we believe have benefited the most from the US central bank’s unconventional stimulus. These include emerging market assets and most commodities, which should also remain vulnerable to disappointing growth in the global economy.