Seems a little out of the ordinary when you have the Fed surveying primary government bond dealers on the Fed's intentions for asset purchases over the next six months. The survey specifically asks about initial size of program, the time over which it will be completed and how often the Fed will evaluate the program.
So the Fed will ask the dealers what action the Fed will take as a way to reduce market uncertainty? The Treasury is asking at the same time what is the level of liquidity in the market. You would think that these two issues are tied together. The quarterly refunding will come at the same time as the Fed QE2 announcement. This should be thrilling.
The initial survey suggests that there is no consensus on what the Fed will do. The bottom line is that wide expectations mean there is going to be disappointment on both the upside and downside. This is not reducing market uncertainty.
So the Fed will ask the dealers what action the Fed will take as a way to reduce market uncertainty? The Treasury is asking at the same time what is the level of liquidity in the market. You would think that these two issues are tied together. The quarterly refunding will come at the same time as the Fed QE2 announcement. This should be thrilling.
The initial survey suggests that there is no consensus on what the Fed will do. The bottom line is that wide expectations mean there is going to be disappointment on both the upside and downside. This is not reducing market uncertainty.
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