Ben Bernanke has done exactly what the market expected him to do: he kick-started QE3. Get ready for a monetary onslaught courtesy of his trusty bazooka!
The FED announced it was taking action to further dampen interest rates with its third round of quantitative easing. This time, QE3 will take the form of purchasing $40 billion in mortgage-backed securities a month until the labor market improves (i.e. indefinitiely).
Pedro Nicolaci da Costa, a reporter for Reuters, called Ben’s QE3 Bazooka a “very aggresive move.”
Operation Twist also remains in effect, at least until the end of the year. Through Operation Twist, the FED buys up long-term Treasuries while selling shorter-term issues. The idea is to keep the interest rates low, way past 2014.
So far today, the market likes it. DOW up 186.50 to 13,519. Gold up 32.9 to 1,766.60. We guess you should just buy anything not nailed down.
This also looks like good news for Obama going into November.