The Fed’s two day meeting wraps up tomorrow and markets are eagerly awaiting the release of any policy changes or revisions in the economic outlook from the central bank. Many pundits expect a variation of the 1960s “Operation Twist” where the Fed lets shorter term US Treasury bonds mature and buys longer dated treasuries to reduce the interest rates on the end of the yield curve. Others expect another bout of Q3-like monetization of debt. If the Fed doesn’t do anything substantial I expect the weakness in the markets to accelerate and the head and shoulders pattern discussed in the previous article to play out.
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