QE3 – Fed to buy $40 Billion in MBS each Month

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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. Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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