“Universal International Venturesâ€: Will the Federal Reserve end treasury buybacks permanently?
“Universal International Venturesâ€, believes that the US Federal Reserve will leave the door open to the possibility of additional treasury buybacks and purchases of agency debt when it formally announces the end of its policy of quantitative easing at the forthcoming meeting of the Federal Open Market Committee (FOMC).
If the firm is correct, the action will closely resemble that of the Bank of England which recently announced the end of its own QE program with the proviso that it didn‘t rule out further purchases of government bonds (gilts) if the economic conditions warranted it.
According to analysts at “Universal International Venturesâ€, there is concern among investors that the recovery in the real economy is at odds with that of the stock market and permanent withdrawal of stimulus could unwind the gains that equity markets around the world have made.
A source close to “Universal International Ventures†said that the central banks in developed economies are in a difficult position insofar as setting policy is concerned because tightening too soon could derail the recovery while continuing for too long could fuel inflationary pressures and put currencies under pressure.
The source added that “Universal International Ventures†believes that they will err on the side of caution.