The FED started its two day monetary meeting yesterday, and today is the day for the big news, the most important news in a long time, and the market consensus is that the FED will begin to rein in its stimulus program. Investors expect the FED to reduce its bond purchases by $10 billion a month. From $85 billion to $75 billion a month.
This tapering is expected and the equity market may not move so much from here. Nor should the goldprices move so much, because so far in september we have seen a huge sell off in the goldprices. The tapering is largely priced in.
In my TA earlier with the headline: «where is the bottom?», I see a higher high, and a higher low. 50% retracement is at 1307. A great support. I will not be surpriced if the goldprices might rise after the FOMC meeting today.
I will pay attention to the FOMC Statement & Fed Funds Rate today at 2:00pm, and FOMC press conference at 2:30pm. Other important things to follow today: Building Permits at 8:30 and Crude Oil Inventories at 10:30.
Ben Bernanke is using the expected tapering as a way to exit his FED Chairmanchip. To reduce the QE he will argue that his money printing program has a positive impact on the market, and the size of the move is symbolic. So, this is the beginning of the end of quantitative easing?
Nope. The debt is too high. That`s why FED is printing money. They use QE to finance the federal budget deficit. The debt is so high and there is not enough buyers in this world to buy all the bonds. If the FED stopped to buy these bonds by QE, the bond market in the US would crash, and the interest rates would go straight up to heaven!
QE will never end.
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