Tags: Medley | Global | fed | Buy | US | Debt

Medley Global: Fed to Buy $500 Billion in US Debt

Wednesday, 20 Oct 2010 04:08 PM

The Federal Reserve plans to launch a program to buy $500 billion worth of U.S. Treasuries over six months and leave itself room for more buying, said a report from influential consultancy Medley Global Advisors, a source told Reuters Wednesday.

"The Fed will reach a majority consensus to embark on a new round of sizable Treasury purchases at the end of its two-day November meeting, aimed at raising inflation expectations and gradually ... satisfying both sides of its inflation/growth mandate," the source said, reading directly from the report.

In a 1-1/2-page report titled: "Fed: Cutting off the Tail", Medley said, according to the source: "they will try to manage expectations that this will immediately cause the unemployment rate to fall or produce (an) immediate growth spurt."

The Federal Open Market Committee, the U.S. central bank's monetary policy-setting body, will meet Nov. 2-3. Investors have been on edge over talk of a second round of quantitative easing, parsing both economic data and market chatter because of the potential wide-ranging impact.

The Fed has said it was prepared to put more money into the economy if needed to stimulate the recovery and avoid deflation, a process known as quantitative easing (QE).

QE effectively requires the Fed to print more money, thus increasing supply and keeping interest rates at low levels.

That in turn makes the U.S. dollar less desirable as investors receive less yield for holding the greenback.

On Wednesday the dollar fell sharply on the combination of the Medley report making its way through the market and comments from German Chancellor Angela Merkel saying the euro remained vulnerable but that there are reasons to think about exiting loose monetary and fiscal policy.

The euro gained 1.64 percent against the greenback, trading at $1.3957. The dollar fell 0.75 percent against the Japanese yen to 80.95, nearly a 15-year low.

Medley Global Advisors, founded by former George Soros political strategist Richard Medley in 1997, has customers among top hedge funds and asset managers in the Americas and Europe as well as investment banks. It was purchased by Pearson's Financial Times in February.

A spokeswoman for Medley was not immediately available to confirm or deny the report.

© 2017 Thomson/Reuters. All rights reserved.

 
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The Federal Reserve plans to launch a program to buy $500 billion worth of U.S. Treasuries over six months and leave itself room for more buying, said a report from influential consultancy Medley Global Advisors, a source told Reuters Wednesday. The Fed will reach a...
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2010-08-20
Wednesday, 20 Oct 2010 04:08 PM
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