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21 May 2013
Flash: QE pullback talk premature for now- DBS Group
FXstreet.com (Barcelona) - DBS Group analysts see that markets are concerned about whether and when the Fed may begin to scale back QE3, where bond purchases/ monetary ‘injections’ are currently running at a pace of $85bn per month.
They note that scaling back sounds like tightening but they ask investors to remember, “we’re talking in second and third derivatives here.” They feel that easing back, when it comes, will be just that:stimulating less aggressively and The Fed will still be trying to make the economy go faster than it is at present. Still, they feel that many are looking for clarification from Bernanke this week as to when the Fed might begin to taper QE3 but suspect that they are unlikely to get it. On the contrary, they feel that “Bernanke is likely to remind investors what the Fed said two weeks ago: that QE can be dialed up as well as down.” Overall, they feel that talk of dialing down remains premature.
They note that scaling back sounds like tightening but they ask investors to remember, “we’re talking in second and third derivatives here.” They feel that easing back, when it comes, will be just that:stimulating less aggressively and The Fed will still be trying to make the economy go faster than it is at present. Still, they feel that many are looking for clarification from Bernanke this week as to when the Fed might begin to taper QE3 but suspect that they are unlikely to get it. On the contrary, they feel that “Bernanke is likely to remind investors what the Fed said two weeks ago: that QE can be dialed up as well as down.” Overall, they feel that talk of dialing down remains premature.