Fed sends markets reeling

Latin American bonds, equities and currencies have slumped over the past month after the US Fed signalled its intention to taper its asset purchases under QE3 later this year. But while financial markets across the region have taken fright, the economic impact of Fed tapering – and indeed the eventual shift to monetary tightening in the US – is likely to be relatively limited. Instead, the recent cash crunch in China may have greater implications for the outlook for the region.