With all the talk of late on what the ECB would do to alleviate stress in the European bond markets, today its the Fed’s turn to give us their latest thoughts and possible actions to, in their eyes, help the US economy. The prospect of QE3 is uncertain today but be sure if its not today, it will be in 2012. What we will likely get is more criteria on what will shape Fed policy looking forward and the possibility of new language expressing their desire to have rates stay low for a very, very long time, maybe past mid 2013. So instead of the actual price fixing of the cost of money thru active policy action, we may now get the verbal manipulation of it instead. Either way, its economic central planning at its worst and the Bernanke legacy of it will unfortunately live on. A better tone to the short end of Italian and Spanish debt is helping the mood in Europe. Spain sold 4.94b euros of 12 and 18 month bills at yields well below last month and the total amount sold was above the target level of 4.25b euros. Also, the German ZEW investor confidence figure 6 months out in their economy unexpectedly rose a touch. Current Conditions though were lower than expected and fell to the lowest since July ’10. UK CPI moderated slightly to 4.8% y/o/y from 5% but was in line with estimates. In Asia, the Shanghai index continues its poor performance, falling for the 8th day in the past 10. It’s now down 20% on the year.
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