RSS feedquantitative easing
’The ‘QE-exit’ inflation paradox
RBC Capital Markets takes an interesting take on the Fed’s newly released Fed Funds projections.
First the projections, which look like this:
As the note under the chart declares, each circle represents an individual FOMC member’s judgment of where Fed Fund rates should be at the end of the specified year.
The LTRO rally is young, says SocGen
Or, taking the “three-year LTRO = QE” meme and running with it. Two charts via Societe Generale’s cross asset team on Monday:
Related links:
LTRO covers BNP, Credit Ag and SocGen 2012 funding –
What the FOMC will (merely) discuss tomorrow
We’ll wait to see if Fedwire has any updates to his article from last week, but right now it seems likely that no major policy decisions will come out of tomorrow’s one-day meeting of the FOMC.
As our colleague Robin Harding points out,
On misunderstanding QE and UK inflation
Is QE money printing, or not? That is the question.
Is it hyperinfaltionary, or not? That is another question.
Ever since the strategy was rolled out by central banks in 2009, the vogue has certainly been to describe it as such.
In for a penny, in for a pound, ECB guv’nor
Well, in for a cent, in for a euro. From Bloomberg on Friday:
European Central Bank governing council members have agreed on a 20 billion-euro ($27 billion) weekly upper limit for sovereign debt purchases as resistance among members grows,
How I learned to stop worrying and love the UK and gilts
As a concept, the UK as a haven takes some getting your head around.
Fortunately, Andrew Roberts, head of European rates strategy at RBS, is on hand to help understand why the UK and in particular its gilt market,
Prepare the printing presses
And so it begins. The softening up exercise for another splurge of QE.
From the Bank of England’s depressing November inflation report.
First, growth (or lack of):
Output appears likely to be broadly flat in the final quarter of 2011.
Understanding your central banker
If you can tell a little about someone from the books they read, you can tell a lot about them from the books they write, especially if they’re a central banker.
Morgan Stanley economist Spyros Andreopoulos has dipped into the library at the “Global Central Bank” and draws comfort from the number of “depression economics”
E*C*B
WE DON’T KNOW WHAT THIS MEANS:
Hat-tip James Mackintosh. It appears on page 8 of the FT’s UK print edition. It’s like one of them Renaissance allegory paintings… although we’re not sure what connection this all has to LLeju Productions,
A Goldman guide to the monetary policy playground
Goldman Sachs welcomes you to the modern world.
The US bank has put out a primer on “‘unconventional’ unconventional policies” to guide us through the maze of recent central bank moves from ‘operation twist’ to UK QE2 and the imposition of a minimum rate for the EUR/CHF exchange rate by the Swiss National Bank.
Money managers and commodities, the case against
Here’s an interesting chart from the EDHEC-Risk Institute’s latest report on long-short commodity investing:
For those who believe that a build-up in long positions by money managers was responsible for fuelling the 2008 record rally in commodities,
Why sterling just got splattered
Impressive move following the Bank of England rebooting QE…
Some immediate reaction from Alan Ruskin of Deutsche Bank:
A few things stand-out immediately on BOE QE decision to do extra 75bn, which was more than the market expected,
Bank of England restarts QE
The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to increase the size of its asset purchase programme,
BoE MPC minutes – market reaction and comment
The Great British Krona has taken a knock following the publication of the September MPC minutes.
For context, that’s an 8-month low against the dollar.
And so to the comment.
Nomura’s economics team focus on the difficult PR task that faces the Bank:
Preparing the slipway for QE2
And so, the softening up process begins.
Surely that’s the only way to read Monday’s Quarterly Bulletin from the Bank of England, which featured the following article on QE.
(emphasis ours)
Between March 2009 and January 2010,
Some extremely special Treasuries
Here’s an interesting datapoint Fred Sommers, of the Basis Point Group, on Monday.
As we’ve written before, Sommers is among a number of back office specialists who have become increasingly concerned about a growing lack of discipline in trade settlements since 2008.
A return to asset purchases (in the UK)
We are a bit late to this, but here are selected highlights from Goldman Sachs prediction on Friday of further asset purchases by the Bank of England.
But this time Goldman economist Kevin Daly reckons there’s a good case for the BoE focusing on credit easing rather than the purchase of more gilts.
Stylised facts from Bob and Kevin
Bob ‘the Bear’ Janjuah and sidekick Kevin Gaynor are ready for a new school year at Nomura.
To help prepare, the strategists have compiled a smorgasbord of “stylised facts” to guide investors.
And here they are:
On misunderstanding QE
There are literally a thousand notes in our inbox this Jackson-Hole Friday morning, going something like:
“Bernanke unlikely to pave the way for QE3″
And most of them put it down to: a rebound in core inflation to a 19-month high of 1.8 per cent in July.
Jedi Economics
If Paul Krugman (and others) are right, classical monetary policy goes out the window in a world where nominal interest rates are zero bound. All the usual monetary tools at the disposal of central bankers just don’t work.
The diminishing returns of QE
The hypothetical QE3, whatever its format, might not work so well because the last two rounds were so successful.
That’s what Goldman analysts Sven Jari Stehn and colleagues say.
They’ve measured previous QEs by their effect on Goldman’s Financial Conditions Index,
Fantasy Fed options
While the world seems divided on whether Friday’s Jackson Hole meeting will result in the announcement of a fresh round of quantitative easing or not — we thought we’d run with the premise that QE in its conventional form is now redundant or impossible.
An important lesson from Jackson Hole 2010
Alternative working title: How QE2 went wrong.
In order to understand what’s really at stake at Jackson Hole on Thursday we need first to understand how the Fed’s thinking has evolved post 2008.
And there’s an excellent presentation from Professor Lew Spellman,
Just cross it out and do bigger numbers
Because if anyone gets the true essence of doing quantitative easing after failing first time round, it’s Japan, no?
Related link:
Inter-yention action – FT Alphaville
The US’s Greece-y new debt dynamics
Some debt doom and gloom from Independent Strategy’s Bob McKee…
… a man who, quite literally, wrote the book on sovereign debt crises.
He notes that the debt deal reached earlier this week does little to address the most pressing of the US’s fiscal issues.
Gold’s not as stretched as you might think, Citi says
One for the gold bugs, this.
The possibility of a surge in the price of gold is growing, according to the commodities team at Citigroup.
In fact, they say, the probability of a short-lived spike in gold is now above 25 per cent (up from 5 per cent just a few weeks ago) and that’s even without a worst-case economic scenario actually happening.
Around the world, in leverage
So much focus on government debt lately — won’t somebody please think of the household leverage?
Morgan Stanley’s Global Monetary Analyst team has:
(And yes, Ireland has been classified as both Anglo Saxon and periphery).
SOMA takes duration risk on your behalf
Did you know that the Fed’s System Open Market Account (SOMA) — the portfolio in which the Fed stashes all the lovely Treasuries it picks up as a result of its quantitative easing asset purchases — has seen its average duration rise from between two and three years to over 4½ years at the end of June this year?
Its holdings meanwhile have risen by an additional $1,600bn worth of assets.
When doves don’t cry – BoE edition
The minutes of the last MPC meeting are out and here’s the price action in the Great British Krona.
Something of a bounce, which is perhaps surprising because on first read the minutes appear to be fairly dovish.
Get ready for QE2 UK. Sort of
The lower-than-expected UK inflation figure for June is reviving chit chat of a second round of monetary easing, first sparked by last month’s minutes from the Monetary Policy Committee.
The economics team at Credit Suisse are joining in — not that they think it will happen any time soon;