Salient to Investors:

The median economist expects the Fed’s latest round of bond buying to reach $1.14 trillion before he ends the program in Q1 2014, and the economy to grow 2 percent in 2013 versus the FOMC forecast of 2.3 percent to 3 percent. 57 percent of economists said the Fed’s policy won’t boost the number of jobs created in 2013, while 63 percent said the Fed will end its purchases on substantial improvement in the labor market, and only 13 percent said it would end on accelerating inflation or inflation expectations. The percentage of economists who consider monetary policy too easy rose to 40 percent from 27 percent prior to the FOMC’s December meeting.

Eric Green at TD Securities said we won’t get the good economic data this year that the Fed needs to be comfortable letting up. Green said economic growth won’t exceed 2 percent because it faces headwinds from federal tax increases and weak global expansion.

The spread between TIPS and nominal bonds implies investors expect inflation of 2.24 percent over the next five years.

Boston Fed President Eric Rosengren said the most interest-sensitive sectors have been responding to the monetary stimulus, which was a major source of strength in the economy in 2012, and will be a source of support in 2013.

Josh Feinman at DB Advisors said housing has turned the corner.

The S&P/Case-Shiller index of home prices increased 5.5 percent in the 12 months to November, the biggest year-over-year gain since August 2006.

St. Louis Fed President James Bullard said the Fed is over-committing to easy policy, while Kansas City’s Esther George said a prolonged period of zero interest rates may substantially increase the risks of future financial imbalances.

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