haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
While I understand that many here are agnostic about the financial future, other than an overall optimistic outlook, some of us are curious about ways to up our returns or cut our risks with some directional bets.
A big question now, will the Federal Reserve actually cut back on its QE operation? The market seems to have accepted Bernanke's statement at face value, and produced an enormous selloff across a wide range of fixed income instruments, the 10 year as an example is trading at ~2.60% today, and was a bit higher several days ago. Similarly, agency and non agency RMBS have hit the fan.
I certainly have no answer, but I sure have a few questions. How robust is this recovery? Housing seems to be a big part of it, and Bernanke has been directly buying $40 billion of agency MBS every month. If this is stopped, or even meaningfully slowed, what will happen to mortgage rates? What effect will this have on home sales, and perhaps even more important from some points of view, on home building, which has been a bright spot in the economy lately.
True that QE has pretty well allowed the banks to clean up their balance sheets, but is that all that counts? I kind of doubt it. Next year is an election year, and Mr. Obama could breath easier about his program if he at lest holds the senate and even better takes the house. True his position is not directly at stake, but I cannot imagine asking for economic weakness going into an election year.
My wild guess is that the taper doesn't happen, or happens in a very mild way, and the 10 year treasury interest rate is close to its peak for 2013.
Your ideas or opinions?
Ha
A big question now, will the Federal Reserve actually cut back on its QE operation? The market seems to have accepted Bernanke's statement at face value, and produced an enormous selloff across a wide range of fixed income instruments, the 10 year as an example is trading at ~2.60% today, and was a bit higher several days ago. Similarly, agency and non agency RMBS have hit the fan.
I certainly have no answer, but I sure have a few questions. How robust is this recovery? Housing seems to be a big part of it, and Bernanke has been directly buying $40 billion of agency MBS every month. If this is stopped, or even meaningfully slowed, what will happen to mortgage rates? What effect will this have on home sales, and perhaps even more important from some points of view, on home building, which has been a bright spot in the economy lately.
True that QE has pretty well allowed the banks to clean up their balance sheets, but is that all that counts? I kind of doubt it. Next year is an election year, and Mr. Obama could breath easier about his program if he at lest holds the senate and even better takes the house. True his position is not directly at stake, but I cannot imagine asking for economic weakness going into an election year.
My wild guess is that the taper doesn't happen, or happens in a very mild way, and the 10 year treasury interest rate is close to its peak for 2013.
Your ideas or opinions?
Ha