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Morning Notes For October 27th 2010 at Trader’s Narrative

Morning Notes For October 27th 2010

The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. I welcome your feedback in the comments:

  • Germany’s consumer climate is expected to remain unchanged at 4.9 points in November, following strong gains in the three previous months. The GfK Consumer Climate Survey points to a further stabilization of domestic demand as consumers appear to be much more optimistic given the strong rise in business confidence in recent months, the improving labor market and still modest inflationary pressures. – Roubini Global Economics
  • “Fed Gears Up For More Stimulus” –w/a week to go before the FOMC decision, the WSJ reiterates point it has been making for some time, that Bernanke will embark on a second round of QE next week despite doubts among some of his colleagues regarding the efficacy of such a move. The WSJ says the Fed will “unveil a program of Treasury bond purchases worth a few hundred billion dollars”over “several months”; the Fed is opting for a more measured approach vs. the initial “shock and awe” of QE1. The Fed will probably concentrate QE2 in the 2’s and 10’s of the Treasury curve. – WSJ
  • QE2/Fed update in the FT – the article says the Fed will probably announce a $500B/6-month purchase plan next Wed with a promise to buy more if conditions warrant; Fed officials are trying to dampen market expectations that inflation targeting and QE will be explicitly linked (i.e. purchases will continue until inflation moves above 2%) – FT
  • Dubai World gets 100% support from creditors for restructuring – Reuters
  • French Vote – France’s Parliament votes today on President Nicolas Sarkozy’s pension bill to raise the minimum retirement age to 62 from 60 even as labor unions prepare for a new day of strikes and protests tomorrow. – Bloomberg
  • Citigroup analysts led by Tom Fitzpatrick said the 10-year U.S. Treasury yield may rise to as high as 3.2 percent by year-end and “much higher” in 2011 on further monetary easing. – Bloomberg

US 10 year bond target QE2

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