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:

DJIA - FT
  blog it

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

  1. haydenneal37374 Says:

    Always remember the little arrow next to the gas emblem on the dashboard. It points to the side of the car the gas cap is on. Click http://www.l33turl.com/worker091730

Lascia un commento

Inserisci i tuoi dati qui sotto o clicca su un'icona per effettuare l'accesso:

Logo WordPress.com

Stai commentando usando il tuo account WordPress.com. Chiudi sessione / Modifica )

Foto Twitter

Stai commentando usando il tuo account Twitter. Chiudi sessione / Modifica )

Foto di Facebook

Stai commentando usando il tuo account Facebook. Chiudi sessione / Modifica )

Google+ photo

Stai commentando usando il tuo account Google+. Chiudi sessione / Modifica )

Connessione a %s...


%d blogger cliccano Mi Piace per questo: