(US) Fed’s Pianalto: Weaker May jobs data may be part of a seasonal pattern, and not likely to alter her economic outlook. (after NFP)
(US) Fed’s Rosengren: A big fiscal shock would not raise the risk of a new recession, expects elected officials to find a compromise for the fiscal cliff issue. (before NFP)
(US) US Fed’s Bullard: Continues to see US 2012 GDP at +3%; sees additional QE possible if the US economy deteriorates. (before NFP)
How to interpret these headlines?
To Quantitative Easing, or not to Quantitative Easing, that’s question… and to answer that, we have to really read between the lines of these Fed officials and focus on the timing of the stimulus… We know that no QE3 will be announced before Operation Twist “OT” is over, that’s why Big Ben was quiet for the past few months… Now that “OT” will expire this month, and given the fact that last 3 month average NFP is at 87K, I believe there is a chance that the Fed will announce “something” soon, although they could very well delay until next months… And by the looks of it, Bernanke might not be the only one hesitant over another QE as there hasn’t been enough time to evaluate “OT” yet…
I believe the market will be disappointed as the FOMC will probably delay QE3 until the next meeting, after the June NFP release in July, as a quarter of bad employment data might be more convincing than just a couple of months, especially the Fed still have time to act before the Presidential election…
Reinhart: 80% Chance Fed Will Ease – Quantitative Easing
June 4, 2012 by 2 Comments