Traders remain unconvinced by Fed’s QE3 talk

 
Julian Harris
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SENIOR officials at the US Federal Reserve considered voting for more quantitative easing (QE3) last month, its minutes revealed last night, yet investors across the pond remained unimpressed.

Despite a number of the Federal Open Market Committee (FOMC) appearing to lean towards expansion of its balance sheet, stocks in New York fell while the dollar hit a two year high against the euro.

“The minutes do not on the surface suggest a sizable body of support for further immediate action, although it should be borne in mind that the comments were made prior to recent data disappointments,” said Peter Buchanan of CIBC World Markets.

Yet the minutes appeared fairly dovish. “A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment” and stop inflation falling below target, it said.

Meanwhile US benchmark 10-year Treasury yields fell to near-record lows yesterday after a $21bn sale of new notes saw huge demand. The unexpectedly strong sale priced at a record auction low yield of 1.46 per cent due to the debt’s safe haven status among economic concerns elsewhere.