End of QE= End of the rally?

Zerohedge may be right or wrong whether there is collusion between the Fed and the Treasury market primary dealers. What’s for sure is that the Fed is running out of ammos – and their monetization of debt is closely dorrelated with these months’ rally.
clipped from ftalphaville.ft.com

Nevertheless, there is one issue the market should be wary of. As Zero Hedge noted on Tuesday,  the Fed’s purchase timeline is quickly running short. Having originally committed to $300bn worth of Treasury purchases, the latest auction on September 1 brings the total sum purchased since March to $276.3bn. This leaves less then $25bn for future auctions. As to what that implies, Zero Hedge commented:
As Zero Hedge discussed before, this total will be used up in the next 2 weeks. What then? All of a sudden the invisible bid under equities is looking very, very precarious.  And here is a graphic representation to either D-Day for equities or to QE 2.0

Fed Agency purchases - Zero Hedge

Which seems to suggest that when the Fed QE drip-feed is shutdown come mid-September, no-one can really be sure of how markets will respond. This is all the more the case if you consider how closely correlated the US equity market ‘recovery’ has indeed been to Fed purchases:

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Una Risposta to “End of QE= End of the rally?”

  1. haydenneal37374 Says:

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