While the Federal Reserve has made it clear that it won’t raise interest rates soon, it will end some of its other easing programs soon.
That includes its purchase of $1.25 trillion of mortgage-backed securities.
And some experts are worried about what will happen to the credit markets and economy after the Fed reduces its so-called “quantitative easing.”
“There's a lot of anxiety about that,” Ram Bhagavatula, managing director of hedge fund Combinatorics Capital, told CNBC.
Perhaps the biggest worry is that mortgage rates will shoot higher without the support from Fed buying. The certainty that the central bank had brought to credit markets will now be gone.
But the markets still have a security blanket: the Fed’s repeated statement that "economic conditions . . . are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
The rate now stands at a record low range of zero to 0.25 percent.
When the Fed changes that statement, which comes from regular Federal Open Market Committee meetings, then investors will know that rate hikes are on the horizon.
That’s what Fed did 2003-2004, when rates were at a then record low of 1 percent.
“We do have sort of a precedent," long-time Fed watcher David Jones, of DMJ Advisors, told CNBC.
Pimco chief investment officer Bill Gross doesn’t expect a rate increase anytime soon. "We have at least six more months of zero-degree interest rates," he told CNBC.
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