Fed Money Printing Story
With the markets weak, they had to come out with something. We have to be open to buying here. The central banks are out of control, but we have to account for them. It is what it is. The S&P 500 futures are near resistance at 1,352.25. From MarketWatch:
Crude-oil and gold futures traded higher Wednesday, leaving behind their anemic floor-trading opening as investors cheered a Wall Street Journal report that Federal Reserve officials are considering a new type of bond-buying program. Gold for April delivery GCJ2 +0.80% rose $15, or 0.9%, to $1,686.90 an ounce on the Comex division of the New York Mercantile Exchange. Crude for the same month’s delivery CLJ2 +0.96% rose $1.10, or 1.1%, to $105.80 a barrel on Nymex. The program would buy mortgage or Treasury bonds but would tie up the money by borrowing it back for short periods and at low rates.
Directly from the WSJ:
Federal Reserve officials are considering a new type of bond-buying program designed to subdue worries about future inflation if they decide to take new steps to boost the economy in the months ahead.
Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed’s previous efforts to aid the recovery.
Fed officials are set to meet next week and have signaled that they are unlikely to launch new programs at that meeting. Moreover, it is far from certain the Fed will launch another program later on. If growth or inflation pick up much, officials seem unlikely to launch a bond-buying program because the economy might not need the extra help or because doing more could spur higher inflation. But if growth disappoints or inflation slows substantially, Fed officials might decide to act again.
