Where's Our QE3?

by Michael J. Howell20. November 2012 18:53

Promises, paper promises...but so far there has been little evidence that the US Fed is honoring its commitment to add US$85 billion per month to its balance sheet, roughly half as new money and half as reinvested coupons. US policy-makers even suggested that US$23 billion would find its way in during the rump of September 2012, immediately following the mid-month QE3 announcement. Sadly, nothing came. Nothing came in October. And, thus far in November, we have only detected a tiny US$5 billion! The delay is gnawing at market sentiment. One impediment may have been the Election; another could be a desire to wait until the ECB acts through its similar slated QE programme, supposedly later this year. A third reason could be, as Chairman Bernanke said today, that yields have already fallen in anticipation, so reducing the Fed's need to rush. Set against a slightly better US economic tone, these points may explain the Fed's inactively? Whatever, markets will demand to see the colour of the QE3 money before a sustained risk rally occurs. We're sure its coming, but so is Christmas.


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