Fed Seen Pumping Up Assets to $4 Trillion in New Buying – Bloomberg 12-11-12

Salient to Investors:

48 of 49 economists predict the FOMC will buy Treasuries to increase its program to buy $40 billion in mortgage bonds each month, and expect the Fed to wait until its March 19-20 meeting before adopting thresholds on unemployment and inflation.The median economist expects Fed purchases at least through Q1 2014. Economists expect a 2 percent rise in GDP in 2013. 

Joseph LaVorgna at Deutsche Bank Securities said the Fed buying will be massive and open-ended in size.

Roberto Perli at International Strategy & Investment said that adding Treasury purchases would continue to lower mortgage rates and help continue the recovery in housing, and if house prices rise would mean more mortgage refinancing, equivalent to a tax cut or pay increase.

John Lonski at Moody’s Capital Markets said policy makers do not want mortgage rates to climb much higher and will do everything to keep long-term borrowing costs on the low side.

The S&P Supercomposite Homebuilding Index is up 72 percent in 2012 versus a 13 percent gain for the S&P 500. Home prices remain 29 percent below their July 2006 peak.

Read the full article at http://www.bloomberg.com/news/2012-12-11/fed-seen-pumping-up-assets-to-4-trillion-in-new-buying.html




Bond Bubble Dismissed as Low Yields Echo Pimco’s New Normal – Bloomberg 06-11-12

Salient to Investors:

Moody’s John Lonski says G-7 bond rates indicate the markets don’t expect economic growth to exceed 3 percent.

Blackrock’s Jeffrey Rosenberg says the greed that produces bubbles is absent.

Pimco’s Bill Gross says global bond markets are turning ‘Japanese’.

UBS’ George Magnus says we are replicating the Japanese experience.

Bianco Research’s James Bianco says the balance sheets of the world’s six biggest central banks have more than doubled since 2006 to $13.2 trillion. The bond market has no value but the central banks don’t care about value right now.


Pimco’s Mohamed El-Erian says we may be in a synchronized slowdown in global economic growth for a while.”

Marc Faber expects the government bond bubble to burst sooner rather than later, because the consensus is to buy U.S. Treasuries.

Scottish money manager Stuart Thomson doesn’t see a bear market because yields are extremely low for a very good reason, fear.

Read the full article at http://www.bloomberg.com/news/2012-06-11/bond-bubble-dismissed-as-low-yields-echo-pimco-s-new-normal-1-.html