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Weekly Wrap Up TRADETHENEWS.COM
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Helicopter Ben Lands QE3, Refueling Risk-On Rally September 10 - September 14
- The Fed authorized its third round of quantitative easing this week, promising to dump liquidity into US and global markets to increase what it called the inadequate pace of economic recovery and boost employment. The new round of easing may be Chairman Bernanke's biggest yet, as the Fed has promised not to stop buying until the labor market "improves substantially." Substantial improvement was not clearly defined. Meanwhile, the last big barrier to the ECB bond buying program was eliminated this week. Germany's Constitutional Court authorized German participation in the ESM bailout fund with only two main conditions: that parliament must be consulted on ESM activities and that Berlin's contribution will not exceed €190B without the approval of the Bundestag. Spreads between bunds and Spanish and Italian government debt immediately narrowed after the ruling was handed down, and by the end of the week yields on Italian and Spanish 10-year debt had fallen below 5% and 6%, respectively. In the hours following the Fed's announcement, US equity markets rallied hard and the DJIA and S&P500 closed at their highest levels since December 2007 on Thursday. Global markets caught up to the US on Friday, while US markets added more modest gains to close out the week. For the week, the DJIA gained 2.2%, the Nasdaq rose 1.5%, and the S&P500 added 1.9%. Gold futures surged a couple of percentage points to as high as $1,780 on the additional Fed stimulus, while crude oil topped $100 for the first time since early May
- The FOMC gave the market everything it wanted on Thursday, extending its low-rate pledge another year to 2015 and launching a new unlimited round of quantitative easing. The new Fed bond buying program has the real potential to exceed the first two installments of QE. While the monthly purchase total of the new program is only $40B of mortgage-backed securities a month, less than QEII's $75B a m ...
- The FOMC gave the market everything it wanted on Thursday, extending its low-rate pledge another year to 2015 and launching a new unlimited round of quantitative easing. The new Fed bond buying program has the real potential to exceed the first two installments of QE. While the monthly purchase total of the new program is only $40B of mortgage-backed securities a month, less than QEII's $75B a m ...