Tapering Eve
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Tomorrow (now today) the FOMC will wrap up their two-day meeting and issue their statement on monetary policy. It is widely expected the FOMC will decided to give a haircut to their $85 billion monthly bond buying program - currently comprised of $45 billion in Treasury securities and $40 billion in mortgage-backed securities (MBS).
The consensus is looking for a tapering of $10-$15 billion in total. Heading into the event, a debate has been developing about the composition of the tapering with many now looking for a larger cut in Treasuries versus MBS.
"While we believe the Fed will announce tapering at this week's meeting, our sense is that the odds are shifting in favor of a greater reduction in UST purchases and less of a reduction to MBS purchases," Compass Points Isaac Boltansky said. "Our expectation for this meeting is that the FOMC will announce a $5B - $10B reduction in its monthly purchases of USTs while also guiding to a future reduction in monthly MBS purchases through both the statement and Bernanke's press conference."
The statement from the FOMC is expected at 2PM ET and a live press conference with Fed Chairman Ben Bernanke is expected at 2:30PM ET.
The consensus is looking for a tapering of $10-$15 billion in total. Heading into the event, a debate has been developing about the composition of the tapering with many now looking for a larger cut in Treasuries versus MBS.
"While we believe the Fed will announce tapering at this week's meeting, our sense is that the odds are shifting in favor of a greater reduction in UST purchases and less of a reduction to MBS purchases," Compass Points Isaac Boltansky said. "Our expectation for this meeting is that the FOMC will announce a $5B - $10B reduction in its monthly purchases of USTs while also guiding to a future reduction in monthly MBS purchases through both the statement and Bernanke's press conference."
The statement from the FOMC is expected at 2PM ET and a live press conference with Fed Chairman Ben Bernanke is expected at 2:30PM ET.
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