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Evans: Fed not ready to cool accomodation

  • The beatings will continue. The Fed's biggest challenge today is credibility, says Chicago Fed boss Charles Evans, who wants to be crystal clear: The central bank will continue to be accommodative until it gets the economy it wants. Citing a "shocking amount" of fiscal restraint, Evans says 2013 growth is likely to fall short of expectations.
  • He does tip his hand on the taper, suggesting the Fed is likely to buy $1.5T in assets under QE3. With $1.1B already purchased and assuming another $85B this month and December, it suggests a fairly rapid pace of tapering next year.
  • "I'd like you to do a lot more lending," Evans tells his audience of Illinois bankers.
  • A first as far as we know, the Chicago Fed is live-tweeting the Evans speech.
  • Treasury yields continue higher on the session, the 10-year up 5 bps to 2.72%. TLT -0.9%.
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Comments (9)
  • User 5935901
    , contributor
    Comments (48) | Send Message
     
    The tweet is "our purchases will continue to be open ended. We may need to purchase 1.5 trillion in assets until January 2015".

     

    Does this mean they will purchase 1.5 trillion additional assets?
    12 months in 2014 + 2 months (Dec 2013, Jan 2015) = 14 months
    14 * 85 billion = 1.2 trillion
    so to reach 1.5 trillion they would need to increase purchases by 20 billion each month.

     

    or do they mean to include the assets already purchased
    1.5 trillion - 1.1 = 0.4 trillion left which means a massive taper coming our way
    19 Nov 2013, 03:53 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9999) | Send Message
     
    Why would banks take the risk of increasing business loans when they can simply borrow from the Fed @ ~0.25% and use the capital to buy 30 Year Treasuries and pocket a 350 basis point profit on the spread?
    19 Nov 2013, 03:58 PM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    They won't because they know inflation is coming. But I think they could make a profit on them at much shorter maturities, and I am sure that is what they would do. They are not dumb enough to buy 30s until the yield curve rises.
    19 Nov 2013, 06:09 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9999) | Send Message
     
    I don't disagree but remember...the Fed will always be there to buy the 30s off of the bank's books if inflation begins to be a problem for them (which won't happen for a very, very long time).
    19 Nov 2013, 08:58 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4508) | Send Message
     
    alot more lending only if the banksters are responsible for the loans not tax payers.
    19 Nov 2013, 05:47 PM Reply Like
  • notta lackey
    , contributor
    Comments (131) | Send Message
     
    Why doesn't the Fed start showing a "shocking amount of fiscal restraint"?
    19 Nov 2013, 06:06 PM Reply Like
  • Brian58
    , contributor
    Comments (219) | Send Message
     
    The markets response to treasury yields is what determines the taper. If the 10 yr goes above 3%, the printing press goes on. It's self fulfilling. If they threaten taper, rates climb and....."we're just kiddin". They're trapped and they know it.
    19 Nov 2013, 07:48 PM Reply Like
  • into dark shadows
    , contributor
    Comments (413) | Send Message
     
    This is par for the course, what did we expect from nothing more than a mo-mo cheerleaders squad?
    The American worker is to be the sacrificial lamb on the alter of the cult of personality called the Federal Reserve!
    The first step in any recovery is to admit you have a problem, this is in no way an admission of hitting bottom, the insanity will continue until someone finally steps up and see's the horror this policy has wrecked on the working man / woman of this great country!
    After how many YEARS of extraordinary action (since 2008) will finally be enough for them? Can the little guy struggle long enough to see the end of this QE led destruction of their standard of living?
    Lord have mercy!
    God save the Republic.
    19 Nov 2013, 08:20 PM Reply Like
  • Voice of common sense
    , contributor
    Comments (123) | Send Message
     
    Why aren't these lackey fed bureaucrats charged with market manipulation?
    19 Nov 2013, 09:37 PM Reply Like
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