Salient to Investors:
48 of 49 economists predict the FOMC will buy Treasuries to increase its program to buy $40 billion in mortgage bonds each month, and expect the Fed to wait until its March 19-20 meeting before adopting thresholds on unemployment and inflation.The median economist expects Fed purchases at least through Q1 2014. Economists expect a 2 percent rise in GDP in 2013.
Joseph LaVorgna at Deutsche Bank Securities said the Fed buying will be massive and open-ended in size.
Roberto Perli at International Strategy & Investment said that adding Treasury purchases would continue to lower mortgage rates and help continue the recovery in housing, and if house prices rise would mean more mortgage refinancing, equivalent to a tax cut or pay increase.
John Lonski at Moody’s Capital Markets said policy makers do not want mortgage rates to climb much higher and will do everything to keep long-term borrowing costs on the low side.
The S&P Supercomposite Homebuilding Index is up 72 percent in 2012 versus a 13 percent gain for the S&P 500. Home prices remain 29 percent below their July 2006 peak.
Read the full article at http://www.bloomberg.com/news/2012-12-11/fed-seen-pumping-up-assets-to-4-trillion-in-new-buying.html