Shock And Awe

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of evolving financial and economic developments.

The trades would appear to be:

1) buy equities

2) buy bonds (though the issue for a futures monkey like Macro Man is whether you buy TYM9 or USM9)

3) sell the USD (on the basis that everyone else is going to)

4) buy oil (on the basis of 3, and the inevitable projection uber-inflation moving forwards.)

Feedback welcome!

About Macro Man 245 Articles

In real life, Macro Man is a global financial market trader at a London-based hedge fund. The Macro Man blog is a repository of his views, concerns, rants, and, on occasion, poetic stylings.

His primary motivation for writing is to hone his own views and thus improve his investment performance; however, he welcomes interaction with informed readers.

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1 Comment on Shock And Awe

  1. dear marco man,

    you guys are great…so..i m just thinking about the USD.
    as u say everyone is selling it, do u propose it to b near end of year also when it start falling?

    as i m also quite concern about the EU conditions with Eastern Europe. which should haunt Euro. and NZD is in bad economic conditions. so i m just thinking where would ppl go to. as every where else is still in quite a mess?

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