This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bernanke Does the Expected and Then Some

NEW YORK ( TheStreet) -- The Federal Reserve expanded its money madness on Thursday. The Federal Reserve Open Market Trading Desk has been instructed to purchase agency mortgage-backed securities at a pace of $40 billion a month, with a prorated amount of $23 billion being bought during the remainder of September.

This quantitative easing program, or QE3, is open-ended and without a ceiling to the total expansion of the Fed's balance sheet. Operation Twist, where the Federal Reserve extends the maturities of its holdings will continue until the end of the year at $35 billion per month. The mortgage-backed securities program and Twist thus total $85 billion per month through December.

The Federal Reserve will also continue reinvesting the principal amounts of maturing issues of agency debt and mortgage-backed securities into new agency mortgage-backed securities. Finally the zero to 0.25% federal funds rate will be extended until at least mid-2015.

The expert consensus calls I discussed Thursday in my post What to Focus On After the Fed Statement included the open-ended commitment and the focus on purchasing mortgage-backed securities. The FOMC expects its new policy actions to "put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

In my opinion the FOMC just added another ridiculous program that helps Wall Street while ignoring Main Street.

The initial reaction in the U.S. capital markets was back and forth market gyrations until the moves I expected occurred, except for the U.S. Treasury 10-year yield. The purpose of this bold monetary policy move was to bring down longer-term US Treasury yields, but instead the yield on the 10-Year US Treasury note tested its 200-day simple moving average at 1.832% with the yield on the 30-Year US Treasury bond above 3.00% this morning.

Comex gold extended its rally to $1,780.2 the Troy ounce this morning, which is between my monthly risky level now a pivot at $1753.7 and my quarterly risky level at $1805.8. Nymex crude oil cleared its 200-day simple moving average at $96.61 and traded above the $100 per barrel mark this morning.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.22 -0.05%
FB $101.07 0.07%
GOOG $681.87 -0.33%
TSLA $162.37 13.00%
YHOO $26.86 -0.89%


Chart of I:DJI
DOW 15,725.76 -188.98 -1.19%
S&P 500 1,827.93 -23.93 -1.29%
NASDAQ 4,243.1530 -40.4390 -0.94%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs