The QE2 (quantitative easing 2) program is about to end. The US economic recovery has slowed down.So the entire world wonders if the Fed Reserve will introduce QE3?
Not so long ago the Bank of America interviewed numerous professional investors about the possibility of another quantitative easing program in the near future. Most respondents gave a negative response. The rest answered they weren’t sure about the term of QE3.
What are the possible consequences for numerous stock and other markets around the world?
As soon as QE2 ends the mentioned markets will see cash shortage as the USA will stop pouring money into the national economy by terminating the US T-Bond purchases. It doesn’t mean the markets will collapse at once. However, they will probably see a slowdown.
According to the official data provided by the US government, the Federal Reserve has been the major T-bond buyer over the recent months while foreign investors have reduced their purchases lately. The domestic buyers (US households) start getting rid of the bonds:
No wonder if the US bond market collapses without the Fed Reserve’s support.
