US Federal Reserve May Look to End Quantitative Easing
The US Federal Reserve dropped a bombshell on investors last night as it became clear from the minutes that they are just as split as our own Bank of England.
However, whilst the BoE looks like it is set to ramp up quantitative easing, the Fed is already looking ahead to the exit.
The minutes also added an element of uncertainty as they discussed the potential for the Fed's quantitative easing to add to financial instability.
Investors certainly do not want to hear anything about a lack of stability and so the Dow Jones sold off late in its session.
It wasn't only the equity markets
that saw volatility either as the bond markets
also saw some sharp moves.
Traders scrambled for position as they attempted to work out what the minutes actually mean for the future of the QE program and interest rates in the US.
The Dow's triple digit loss, taking it to 13,927, has meant that European indices are very much in the red this morning.
At the time of writing, the FTSE 100 has fallen by some 40 points to 6355.
Having hit the 6400 level but failed to close above it, the index has pegged in the next target for the bulls. It will be interesting to see whether this sell off is as short lived as the previous ones or whether it is time for a more serious retracement.
Our account holders who have been opposing the recent strength will be breathing a big sigh of relief.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Angus Campbell, 21 February 2013