Whoops?

by Michael J. Howell7. January 2013 17:06

Market sentiment has been hit by the latest FOMC minutes which indicated that several meeting participants urged the Fed to halt QE in 2013. At first sight this seemingly reverses Bernanke's recent statements and flies in the face of Fed insistance that there is no timeline, rather than policy remains conditional on economic outcomes. On reading the minutes, the offending concern is plain. But whoops, we had inadvertently picked up the Dec 2011 minutes not the 2012 ones! Therefore, a minority of the FOMC ALWAYS seems to demand an end to QE. So Dec 2012 was no different. In short, market sentiment should rebound, perhaps spurred by latest SOMA data indicating that the Fed balance sheet in early January may be close to a new peak. Implied monetary base growth is ahead by an annualised 16.5% over 3 months. QE continues Phew!

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