Posted on 07/11/2012 9:37:58 PM PDT by blam
BofA: QE3 Is Coming In September
Sam Ro
July 11, 2012, 7:25 PM
Economists spent the afternoon thumbing through the minutes of the June Federal Open Market Committee (FOMC) meeting.
They were searching for clues on what the Fed's next move might be.
Bank of America's economics team led by Michael Hanson and Ethan Harris think that the next move is QE3, a form of monetary policy that involves buying certain securities to lower interest rates.
From this afternoon's note to clients:
The minutes from the June FOMC meeting revealed a larger number of Fed officials either favoring or willing to consider additional easing if conditions weaken. Members noted even greater uncertainty and risks skewed to the downside, suggesting that additional easing may occur sooner rather than later. We expect that the outlook will be weak enough to warrant addition Fed easing by the September 12-13 FOMC meeting; we look for Fed officials to both push out their forward guidance on rates until at least mid-2015 and to launch QE3.
During the June FOMC meeting, the Fed announced the extension of its maturity extension program (MEP), aka "Operation Twist." In an MEP, the Fed buy long-term bonds and finances those purchases by selling short-term bonds. Ultimately, the goal is to lower long-term interest rates.
(Excerpt) Read more at businessinsider.com ...
It was already announced and begun, IIRC, to the tune of well over $200 billion. Maybe that was for the early summer with some likelihood that they’ll do it again soon, though. And yes, bonds—not “securities.” It’s a collapse now or collapse later kind of decision.
Keeping yields unnaturally low gives fund managers one of many excuses to continue cyclically stuffing our virtually worthless treasuries with more debt gifts for government income recipients.
And yeah, the party will eventually end. After the end?
Yep, everyone (not only bond investors but most government income recipients) will take one “haircut” after another. That’s my guess.
Our low risk currency, teetering over the abyss for what seems to be ages. Ain’t it great? Have fun. Enjoy the slide.
“Our low risk currency,...” [Much irony and sarcasm intended there, BTW.]
the stock market MUST be primed to get obama through the next election... PPT getting ready to report for duty, just in case rumors don’t do the trick
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