Investor's window  |  November 27, 2012 13:20:28

QE3 started in September, but last week. Bears should be on the lookout

The U.S. central bank this month finally began to flood the financial markets liquidity in the third round of quantitative easing (QE3). She took her time. Although very QE3 announced in mid-September, but its implementation had to wait almost two months.

The image above shows the total volume of mortgage-backed bonds (MBS) held by the U.S. central bank. Although the Fed in September announced that it would bundle these bonds monthly increase of 40 billion dollars, the first major purchase made only last week when MBS held by the Fed have grown by 29 billion dollars to 886 billion reason is the nature of these purchases take the form of forward contracts with settlement often up to 60 days. If we add another 40 billion 35 billion that the Fed has to buy the refinancing of bonds held to maturity, we get to the $ 75 billion figure, which is the approximate liquidity, the central bank will begin each month zplavovat financial markets.

So, while the Fed launched QE3 de jure in mid-September, but de facto it markets begin to feel now. In the context of the above, then go up the S & P500, which without a fundament jumped last week by less than 5%, an entirely new dimension.

Should be on the lookout in the coming days and these have therefore mainly bears who still rely on common sense and believe that overpriced stocks finally begin to respond to the deteriorating situation in the world economy and proholující debt crisis, which has politicians solves only other socialization losses. The past no longer have repeatedly shown that when it comes to market central bank share prices will begin to live their own life and the continuing depreciation of paper currencies is pushing up regardless of other fundamentals.

Jaroslav Brychta

Jaroslav Brychta - principal analyst at X-Trade Brokers

  • He graduated from the Economic Policy at the Silesian University in Opava. The XTB operates since 2007, currently as chief analyst. It mainly deals with the analysis of exchange rates, as well as bonds, the banking sector and monetary policy. His professional articles and interviews contributes to most of the leading media.
  • Logo XTB X-Trade Brokers (XTB) is an international brokerage house that provides its clients with professional trading conditions for forex, commodities, stocks and options.Its services are constantly improving, as evidenced by a number of international awards and it is confirmed by the titles Broker Forex broker and year, obtained at the Investment Summit MoneyExpo 2012th

    In addition to the standard menu XTB allows Forex traders direct access to the market, thus enabling them to reach the lowest spreads. Beginning options traders can use the optional possibility of opening an account with no minimum deposit of 2500, - CZK . For XTB offers its clients advice on trading, 24 in the Czech language support, free training courses and daily news from the financial markets.
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