The Federal Reserve Dropped Its Hammer To Reverse Operation. QE3 Suspense Will Not Drop.

Beijing time yesterday (September 22nd) morning, the US Federal Reserve (FED) announced that before June 2012, it would replace the $400 billion 6~30 long and medium term treasury bonds, reduce the equivalent amount of the 3 year treasury bonds, increase the proportion of the medium and long-term bonds of its assets portfolio, and maintain the balance sheet size of $2 trillion and 850 billion unchanged.

With the expected drop in liquidity and the rising attractiveness of short-term interest rates to the dollar, commodities plunged rapidly on Wednesday night and went down all day yesterday.

As of 16 yesterday, the euro fell to 1.35 against the dollar, hitting 7 and a half months low; the Australian dollar hit a 6 month low against the dollar; the Canadian dollar hit a 9 month low against the US dollar; the won won a new low against the dollar, and New Zealand dollar hit a 4 month low.

Meanwhile, the yield of us 30 - year treasury bonds fell sharply yesterday.

Germany's 10 year treasury bond yield also fell to 1.68%, the second lowest point in history. The yield on 30 - year treasury bonds also fell to 2.46%, the second lowest point since 1994.

As early as August 22nd, the Financial Times reported that the option of Bernanke, chairman of the Federal Reserve, was some form of "OT".

The scale of capital used yesterday and market expectations are basically the same.

Zhang Minjie, a well-known hedge fund manager, believes that for investors, the Fed's actions are more important than data.

The market originally wanted to find clues to QE3. For example, "if the reverse operation fails, the Fed will reassess the risks of economic operation. Once the economy is down, the Fed will take further measures to boost the economy", and the market performance will be quite different.

According to "daily economic news" reporters understand that the yield of the 30 year treasury bonds in the United States is the standard of housing loan interest rates.

Zhang Minjie said that with the logic of the Federal Reserve, "short selling and buying long" for US Treasury bonds will help reduce the cost of corporate loans and residents' loans to buy houses, buy cars and go to school, and create a relaxed environment for future businesses and residents to expand investment and consumption, so as to save the economy.

However, analysts pointed out that the reversal operation will end in June 2012, and for 9 months, the Fed will sell an average of US $750 billion a year, and the scale of the reverse operation will be US $400 billion.

In the medium to long term, the United States

Guotai Junan Securities issued a report yesterday that the current round of operation will help improve the quality of the Federal Reserve's balance sheet, but the stimulus to the US economy is limited. It is difficult to reverse the US economy by "reverse operation".

Historical data show that the Federal Reserve adopted similar measures to save the US dollar under the Bretton Woods system in 1961, but it was regarded as a failure.

But Bernanke has always believed that if the scale of the last "twist" is large enough, the result will be the opposite. I believe that the intervention of balance sheet will achieve positive results.

QE3 dispute resurgence

Bernanke has previously publicly stated that non-traditional monetary policy includes three categories: low interest rate commitment, QE and reverse operation.

Wang Guobing, a macroeconomic analyst at Northeast Securities (17.85, -0.21, -1.16%) believes that with the introduction of the above three policies, there will be no more savings for other tools available to the Federal Reserve in the future.

As to whether to push QE3 again, Wang told reporters that the pressure of inflation pressure and debt crisis should be dissipated.

The US inflation rate has risen to 3.8%, the core inflation rate has reached 2% of the management target upper limit, and the short-term inflationary pressure has been higher.

Li Xunlei, an analyst at Guotai Junan, believes that under the pressure of inflation and political pressure, the Fed will not be able to launch QE3 in the future.

Despite the Fed's claim that it is not subject to political interference, recent Republican congressmen explicitly oppose the Fed's excessive intervention in the economy, which is more or less a potential pressure on the Federal Reserve policy.

But Standard Chartered Bank reported that the Federal Reserve plans to implement the "reverse operation" by June 2012. In addition to lowering the borrowing costs of enterprises, if the inflation pressure is effectively reduced, it is expected that the US government and the Federal Reserve will take more monetary easing measures, which is actually pave the way for QE3.

Societe Generale (12.62, -0.19, -1.48%) also said that as the US inflation risk cooled, the Fed would sacrifice QE3 early next year.

It is reported that in the interest rate meeting, 3 members of the open market operation Committee (FOMC) of the Federal Reserve opposed the additional policy stimulus, while the other 7 members agreed that the voting result was consistent with the August interest conference.

Guotai Junan Securities believes that this divergence shows that in the face of higher inflation, the Hawks inside the Fed apparently oppose further policy easing.

Ping An Securities analyst Li Qingming told the daily economic news reporter that the Federal Reserve's easing of inflation concerns in the statement may help clear the way for its new stimulus measures.

From the meeting statement, the Federal Reserve has been inclined to promote economic recovery in controlling inflation and ensuring economic growth balance.

"At present, the United States needs to implement a strong austerity plan to deal with the debt problem, and in the case of insufficient domestic demand, we still need to rely on a loose monetary environment to maintain the stimulus to the economy."