The 2013 Taper Tantrum
Bernanke mentioned 'tapering' once. Emerging markets crashed 15% in weeks.
On May 22, 2013, Fed Chair Ben Bernanke suggested the Fed might begin reducing its bond-buying program. Markets reacted violently: 10-year Treasury yields jumped from 1.6% to 3% in weeks, emerging market currencies collapsed, and global equities sold off sharply. U.S. stocks recovered quickly but the episode revealed how addicted markets had become to quantitative easing — and set the template for every subsequent Fed communication challenge.
Key Facts
- 10-year Treasury yields rose from 1.6% to 3% in just 4 months
- Emerging market stocks fell ~15% and many EM currencies lost 10–20% vs USD
- The Fed ultimately delayed tapering until December 2013 after markets stabilized
Market Impact
Emerging market ETF (EEM)
-15.0%
May–Sep 2013
10-year Treasury yield
+90.0%
May–Sep 2013 (bps)
S&P 500
-6.0%
May–Jun 2013 (mild)
SPY Performance - From Event Start
Monthly price change (%) from May 22, 2013. Extended 12 months beyond September 18, 2013 for recovery context.
💡 Run SPY from the 2013 taper scare trough to see the subsequent rally.
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What this means
- Single historical episodes are context, not forecasts. Market paths can differ meaningfully in future cycles.
- Returns shown around major events can be highly sensitive to entry and exit dates, so compare multiple windows.
- Risk management and diversification matter because large drawdowns and sharp rebounds often cluster together.
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What happened
On May 22, 2013, Fed Chair Ben Bernanke suggested the Fed might begin reducing its bond-buying program. Markets reacted violently: 10-year Treasury yields jumped from 1.6% to 3% in weeks, emerging market currencies collapsed, and global equities sold off sharply. U.S. stocks recovered quickly but the episode revealed how addicted markets had become to quantitative easing — and set the template for every subsequent Fed communication challenge.
Why it mattered
- 10-year Treasury yields rose from 1.6% to 3% in just 4 months
- Emerging market stocks fell ~15% and many EM currencies lost 10–20% vs USD
- The Fed ultimately delayed tapering until December 2013 after markets stabilized
Worked example
Historical hypothetical - for educational purposes only. Not investment advice.
Scenario
$10,000 in SPY at the start of Taper Tantrum
Hypothetical outcome
Fell to ~$8,500 at the trough (-15%)
Key lesson
Investors who held through the trough - rather than selling at the bottom - participated in the subsequent recovery. Long-term holders of broad indices eventually saw full recovery and new highs.
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What happened during Taper Tantrum?
On May 22, 2013, Fed Chair Ben Bernanke suggested the Fed might begin reducing its bond-buying program. Markets reacted violently: 10-year Treasury yields jumped from 1.6% to 3% in weeks, emerging market currencies collapsed, and global equities sold off sharply. U.S. stocks recovered quickly but the episode revealed how addicted markets had become to quantitative easing — and set the template for every subsequent Fed communication challenge.
How did Emerging market ETF (EEM) perform during this period?
Emerging market ETF (EEM) fell 15% during May–Sep 2013. While painful for investors who sold, those who held through the decline often participated in the subsequent recovery.
What would $10,000 invested in SPY at Taper Tantrum be worth today?
Use our Investment Calculator with SPY starting 2013-06-24 to find the precise current value. Run SPY from the 2013 taper scare trough to see the subsequent rally. Historical performance does not guarantee future results.
How long did it take markets to recover from Taper Tantrum?
Bernanke mentioned 'tapering' once. Emerging markets crashed 15% in weeks. Recovery timelines varied by asset class: broad indices like the S&P 500 eventually recovered to pre-crash levels, though the duration ranged from months (2020) to years (2008) or even decades (1929). Our timeline tool lets you run these exact recovery scenarios.
What investing lessons does Taper Tantrum teach?
Market crashes are a recurring feature of investing, not an anomaly. Taper Tantrum reinforces several key lessons: diversification reduces but doesn't eliminate crash risk; panic-selling at the bottom locks in losses; and historically, patient investors who held through or bought during crashes were rewarded over multi-year horizons. Use our calculator to run specific "what if I had bought / sold at this exact point" scenarios.
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All calculations are hypothetical and educational only. Data sources: official financial exchanges and public datasets. View full methodology →