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Markets  |  December 12, 2012 12:52:02

Balance Sheet Fed reached 4 trillion next year. USD


iPoint.cz Equity markets yesterday received several positive messages. Expectation solutions fiscal cliff before Christmas has helped to shares to grow equally well and learn more how to better trust the German ZEW investor monitored sentimentom, better balance of Commerce or U.S. Treasury bills auction an excellent Italy and Spain. Support also provided the growth market shares of Apple (+2,18%), on which is built the defense bank Morgan Stanley. Yester cocktail stock: Dow Jones +0.60% SP500 +0.65%, Nasdaq Composite +1.18%.

Obama retreats republikánom


The growth of the stock market yesterday helped statements Democrats in Congress that would like to see an agreement on fiškálnom reef before Christmas. Although this is of course considered to be very challenging, we would subject the U.S. economy fiškálnemu cliff. Rep. Boehner of the House of Representatives but still does not know how to find a compromise with Obamom and therefore the Agreement constitutes only very hard. In its new proposal for White House declined volume of anticipated revenue increases in the proposed consolidation of public finances to 1.4 trillion. From $ 1.6 trillion. USD. Democrats did so, the first step toward accommodating the GOP but, also so called Boehner plan as unbalanced.

Debt ceiling he returns to the scene

Until this is resolved but one problem, the other is also slowly begins to influence the action on the market. The current U.S. debt ceiling is currently at 16.394 trillion. USD. The current federal debt is from him just to 67 billionUSD. The preliminary plan on how to extend the time that you will be achieved, calculated to limit carbon bonds of State and of local governments for financing the transition period in collecting taxes or restrictions on contributions to pension funds federal government. Obama wants the approval process was spreading dlhového ceiling completely abolished Congress, no Republicans consider it the best possible means to control the financing Obamovej administration. Who will be approved agreement fiškálnom reef, it is possible that the Republicans will not allow even an increase dlhového ceiling.

Fed QE3 extend +

Assistance for the economy, therefore, is expected by the monetárnej policy, I mean the Fed. It is expected that, due končiacej operations will twist in today's FOMC announced plan to purchase a time-unlimited federal bond in a volume of 45 billion USD.Along with a program of purchases of mortgage securities in the volume reached 40 billion USD total amount of purchases to 85 billion USD. Volume 45 billion not selected randomly. This is about the exact amount of compensation for the resources in which it was exercised about Operation Twist, I mean the sale of bonds on the short end of the curve výnosovej and purchase bonds at a long end. From 49 economists, whose seek the agency Bloomberg to view up to 48 expected increase in its volume QE 3 +.

Balance Sheet Fed reached 4 trillion next year. USD


Whereas for OT nerástla Fed Balance, Balance Sheet Fed now will grow from USD 2.8 trillion to-date quite rapidly. It is expected that by the end of next year the Fed's balance sheet total reached nearly $ 4 trillion. Balance Sheet Fed will make up nearly 30% of U.S. GDP, but GDP growth next year will reach estimated by analysts, only 2%.

Future: Targeting the unemployment rate

Očakávaniach just on economic growth from the Fed will signify up-to-date developments in the financial markets. It is expected that the Fed again reduced growth estimates for next year, similar to how the ECB has done, of course, in a lower-range. But are not expected to change in the dictionary, how long will the Fed keep rates low. Consensus is in mid 2015th Bernanke press conference but it could still directed to the possibility of further stimulation, and this will be the situation required. Also could signify transition toward targeting of nominal GDP or the unemployment rate. Flange nominal GDP is quite hard to grasp variable, the unemployment rate for the Fed vodítkom better.

View on today

If they fulfill the expectations and the Fed will reduce growth estimates, indicate additional incentives and podmieni their purpose in the form of unemployment rates, the dollar should continue at the current trend of weakening of the euro against and grow up to the level of 1.31. If on the contrary expectation disappoints, opens the space to fall to 1.2950 before 1.2880.

Author: John Benaki | TRIM Broker, as | Trading on exchanges TRIM Broker


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