Wall Street Webcasting has prepared and provided for you an exclusive broadcast of Wells Fargo Securities own, Rich Gordon. Gordon is highly recognized for his weekly narrates regarding the fixed income strategy at Wells Fargo Securities (
. This week, Gordon discusses the ramifications that may result from the Fed’s decision to bar tapering asset purchases for now, and the potential consequence that may incur on the value of the dollar because of the implementation of QE.
The Fed’s goal is to preserve the current degree of monetary stimulus. This means upholding 45 billion per month in treasury purchases, 40 billion per month in mortgage purchases, and a 0% short-term interest rate. This will remain in place until the unemployment rate declines below 6 ½%, and the long-term inflation target of between 2 and 2 ½% isn’t violated.
The strength of the dollar and prices of commodities seem to have a converse relation to one another. Our prediction is that the devaluation of the dollar will persist due to the Fed’s engagement in an “open-ended commitment to massive monetary stimulus.” This prediction arises because of recent data; the Dollar Index has decreased significantly during the month of September, and with the implementation of QE, we believe that further decline is in sight for the dollar. The Fed’s acceptance of “QE Forever” may have crucial effects for investors. For one, we believe that investors who have been “underweighted to duration” should contemplate moving to a more evenhanded position.
To learn more about what predictions the Wells Fargo economic analysts hold regarding the direction of the dollar, please tune into their latest video.
Please visit the following link to view the video: