The deed is done. What the market has been pricing in and what Wall Street has been hoping for has arrived. The Fed is to undertake $40 billion a month in purchases of Mortgage Back Securities, as stated in the latest FOMC press release.
As the Fed continues to keep the previously purchased long-term securities on its balance sheet and add $40 billion a month, this comes up to $85 billion a month for the rest of the year.
These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
Here is a quick breakdown from bloomberg: Fed Undertakes QE3 with $40 Billion in Purchases of MBS a month
The market is definitely reacting with risk-on, USD-weakness, commodity and previous metals - strength and JPY-strength. Let's see if this can extend after Bernanke's press conference.
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