110922(Wed): Fed fearful of a “slow” economy, decided to start a program to twist the yield curve by swapping shorter-maturity government securities for longer-dated ones.
In a statement, the Fed said it will buy $400 billion of Treasury securities in the 6- to 30-year range and sell an equal amount of maturities of 3 years or less. The purchases would be completed by the end of June 2012.
The Fed said it acted in light of a worsening global outlook. There were three dissents from the move.
Jonathan Basile, director of economics at Credit Suisse, said the market was disappointed the Fed did not undertake an outright purchase of securities, or QE3. “The Fed moved their chips around but didn’t put any new money on the table,”
. Even if the economy manages to avoid a new downturn, the outlook is for tepid growth not strong enough to bring down high unemployment.
Fed said growth remains slow with the latest data pointing to continued weakness in the labor market.
The Fed said that inflation has moderated and they expect it to settle below its implicit target of around 2%.
In August, the Fed surprised markets to stay near-zero until mid-2013.
Fed decides on $400 billion bond swap - The Fed - MarketWatch
2011年8月28日
5 triggers that will ignite the next bull market
the central bank would assess the toll that stock market weakness, debt-ceiling negotiations and the European debt crisis has taken on the U.S. economy.
Is the market’s recent rally sustainable? That depends on whether the upward move is simply profit-taking, or if it’s an early sign that investors are gaining enough confidence that recession can be avoided and corporate earnings will grow to shift money out of gold, Treasury bonds and other safe havens and take more risk with stocks.
the stock market is a forward-looking mechanism, and part of the reason for stocks’ swoon this summer was due to investors repricing equities to better reflect corporate earnings growth expectations. That reassessment may not be finished. September has been the worst-performing month of the year for the Dow and the S&P 500 since 1950,
do investment professionals — financial advisers and mutual fund managers with a mandate to shift among stocks, bonds and cash — need to see in the economic and political climate in order to put more money into stocks? Here are five potential catalysts:
1. The U.S. deals with its debt crisis
A meaningful compromise would take into account the cutback in entitlements and the restructuring of taxes that would resolve the current financial budgetary difficulties in a believable way, Altfest said, though he added that such a deal appears unlikely until after the 2012 presidential election.
2. Europe sees resolution of its own debt woes
Concerns over the eurozone’s ongoing debt crisis are also weighing on U.S. stocks. A resolution of Europe’s financial instability would be a green light for stock investors.
you’re really looking at a major banking crisis in Europe
3. Retail sales strength improves
Firm retail sales in August would encourage the market at least on a short-term basis, Altfest noted.
Retail sales climbed 0.5 percent in July, the most in four months. The August number will be released by the Department of Commerce on Sept. 14.
retail sales excluding gasoline provides a much more realistic view of the health of consumers’ discretionary spending.
4. Gold, Swiss franc weaken
A decline in the value of gold and the Swiss franc would be another upbeat sign for the stock market.
As a measure of fear, gold has been soaring in price, driven up by investor concerns over the U.S. and Europe’s economies, as well as a conviction that gold is an alternative currency to the U.S. dollar, the euro and other paper money.
If the gold prices start to move south, that would suggest greater comfort with the economic environment and a willingness to take higher risk, which would be positive for stocks, Altfest said.
5. Bank stocks strengthen
The financial services sector is the U.S. market’s worst performer so far this year,
“People are very nervous about the banks, and for the banks to do well would suggest that people are lessening their concerns about the economy,” Altfest said.
It will likely take a long time for the banking sector in both the U.S. and Europe to unwind its problems.
5 triggers that will ignite the next bull market - Weekend Investor - MarketWatch
Is the market’s recent rally sustainable? That depends on whether the upward move is simply profit-taking, or if it’s an early sign that investors are gaining enough confidence that recession can be avoided and corporate earnings will grow to shift money out of gold, Treasury bonds and other safe havens and take more risk with stocks.
the stock market is a forward-looking mechanism, and part of the reason for stocks’ swoon this summer was due to investors repricing equities to better reflect corporate earnings growth expectations. That reassessment may not be finished. September has been the worst-performing month of the year for the Dow and the S&P 500 since 1950,
do investment professionals — financial advisers and mutual fund managers with a mandate to shift among stocks, bonds and cash — need to see in the economic and political climate in order to put more money into stocks? Here are five potential catalysts:
1. The U.S. deals with its debt crisis
A meaningful compromise would take into account the cutback in entitlements and the restructuring of taxes that would resolve the current financial budgetary difficulties in a believable way, Altfest said, though he added that such a deal appears unlikely until after the 2012 presidential election.
2. Europe sees resolution of its own debt woes
Concerns over the eurozone’s ongoing debt crisis are also weighing on U.S. stocks. A resolution of Europe’s financial instability would be a green light for stock investors.
you’re really looking at a major banking crisis in Europe
3. Retail sales strength improves
Firm retail sales in August would encourage the market at least on a short-term basis, Altfest noted.
Retail sales climbed 0.5 percent in July, the most in four months. The August number will be released by the Department of Commerce on Sept. 14.
retail sales excluding gasoline provides a much more realistic view of the health of consumers’ discretionary spending.
4. Gold, Swiss franc weaken
A decline in the value of gold and the Swiss franc would be another upbeat sign for the stock market.
As a measure of fear, gold has been soaring in price, driven up by investor concerns over the U.S. and Europe’s economies, as well as a conviction that gold is an alternative currency to the U.S. dollar, the euro and other paper money.
If the gold prices start to move south, that would suggest greater comfort with the economic environment and a willingness to take higher risk, which would be positive for stocks, Altfest said.
5. Bank stocks strengthen
The financial services sector is the U.S. market’s worst performer so far this year,
“People are very nervous about the banks, and for the banks to do well would suggest that people are lessening their concerns about the economy,” Altfest said.
It will likely take a long time for the banking sector in both the U.S. and Europe to unwind its problems.
5 triggers that will ignite the next bull market - Weekend Investor - MarketWatch
2011年8月23日
Bernanke ready for action, but when is in doubt - The Fed - MarketWatch
Review
In the first round of bond purchases between Dec. 2008 and March 2010, the Fed bought $1.7 trillion of mostly mortgage securities, and in the second round between November and June, the central bank snapped up $600 billion of Treasury bonds.
2011-8-11 hold interest rates at zero, and indicated it would keep low rates to stay through at least mid-2013
Outlook
QE3 is an option if there is a significant downturn in the economy or extraordinary stress in financial markets.
Core consumer price inflation rose at a 1.8% year-on-year rate in July. It would be a mistake to signal an inclination to move ahead with another round of asset purchases.
It is a period of wait-and-see
Bernanke may use the speech, 2011-aug-26, to go through the available policy options, which would be remarkably similar to his speech at last year’s Jackson Hole conference. When, is a different matter.
The next round of quantitative easing may feature small monthly purchases instead of the pledge of a large purchase.
This is the approach favored by Harvard University economist Kenneth Rogoff, who called it “classroom” quantitative easing. He wants the Fed to target an inflation rate and promise to buy “whatever it takes” to get there.
“forward guidance” about policy.
Another option Bernanke is likely to discuss is a move to lengthen the maturity of its balance sheet. This would be designed to lower long-term rates. This step may be unnecessary at the moment with 10-year Treasury /quotes/zigman/4868283 10_YEAR -0.66% yields just above 2%, Gertler noted.
The Fed could also lower the interest it pays to banks for excess reserves to zero from 0.25%. But many economists believe that move might have unintended consequences in the short-term money markets.
Fed asset purchases are designed to push investors to buy riskier assets besides Treasurys. But when they have no confidence, they buy gold and foreign assets, and this doesn’t help the economy, Brusca said.
Bernanke ready for action, but when is in doubt - The Fed - MarketWatch
In the first round of bond purchases between Dec. 2008 and March 2010, the Fed bought $1.7 trillion of mostly mortgage securities, and in the second round between November and June, the central bank snapped up $600 billion of Treasury bonds.
2011-8-11 hold interest rates at zero, and indicated it would keep low rates to stay through at least mid-2013
Outlook
QE3 is an option if there is a significant downturn in the economy or extraordinary stress in financial markets.
Core consumer price inflation rose at a 1.8% year-on-year rate in July. It would be a mistake to signal an inclination to move ahead with another round of asset purchases.
It is a period of wait-and-see
Bernanke may use the speech, 2011-aug-26, to go through the available policy options, which would be remarkably similar to his speech at last year’s Jackson Hole conference. When, is a different matter.
The next round of quantitative easing may feature small monthly purchases instead of the pledge of a large purchase.
This is the approach favored by Harvard University economist Kenneth Rogoff, who called it “classroom” quantitative easing. He wants the Fed to target an inflation rate and promise to buy “whatever it takes” to get there.
“forward guidance” about policy.
Another option Bernanke is likely to discuss is a move to lengthen the maturity of its balance sheet. This would be designed to lower long-term rates. This step may be unnecessary at the moment with 10-year Treasury /quotes/zigman/4868283 10_YEAR -0.66% yields just above 2%, Gertler noted.
The Fed could also lower the interest it pays to banks for excess reserves to zero from 0.25%. But many economists believe that move might have unintended consequences in the short-term money markets.
Fed asset purchases are designed to push investors to buy riskier assets besides Treasurys. But when they have no confidence, they buy gold and foreign assets, and this doesn’t help the economy, Brusca said.
Bernanke ready for action, but when is in doubt - The Fed - MarketWatch
2011年8月10日
Fed: Low rates to stay till at least mid-2013
2011-08-10 The Federal Reserve said it would hold interest rates at ultralow levels “at least” through mid-2013, the first time the central bank put a time frame on their duration.
1.slower pace of recovery over coming quarters. Downside risks to the economic outlook have increased
2. the unemployment rate will decline only gradually” from the July level of 9.1%,
Fed: Low rates to stay till at least mid-2013 - The Fed - MarketWatch
1.slower pace of recovery over coming quarters. Downside risks to the economic outlook have increased
2. the unemployment rate will decline only gradually” from the July level of 9.1%,
Fed: Low rates to stay till at least mid-2013 - The Fed - MarketWatch
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