Markets find the virtue in taper's modesty

Markets reacted positively to today's tapering announcement, with the Fed continuing to pump cheap liquidity into the system in 2014. But concerns remain over the elevation of asset prices and mispricing of risk.

It might appear curious that the reality of the taper has been greeted with equanimity, given global markets were thrown into turmoil in May at the merest hint that the Federal Reserve might taper its massive bond and mortgage-buying program.

There are, however, a number of possible strands to the explanation for why markets responded differently to the announcement.

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