Fed Downgrades U.S. Economic Outlook and Buys InsuranceSubmitted by northstar on Thu, 06/21/2012 - 14:35
LOL and the fat cats are crying.
Last check, DOW drops -200 some points.
Of the Fed's three options available today (do nothing, engage in QE3, extend Operation Twist), it has chosen the diplomatic route. It appears the Fed was concerned that if it took the path of using only language to indicate support it could rock a fragile global financial system. Given that emergency aid could not be justified, QE3 was out of the question at the present time. The Fed has chosen an extension of Operation Twist as it provides insurance and has fewer avenues of criticism. The Fed indicated that an extension of maturities of its Treasury security holdings will not expire as of June but will remain in place until the end of 2012. The expectation is that this action would exert downward pressure on long term interest rates.