Pre-Fedline Open Thread
With just five hours to go, here's a thread for your guesses as to what The Bernank and The Fellen will announce this afternoon.
My personal guess is a series of probabilities. I was on the record since August claiming that The Fed would offer a BLT to everyone in December. A BLT? A Bernank Legacy Taper. By trimming $10B off of the stated monthly money-printing, The Bernank could claim that "before he left office, he set The Fed on a course to eliminate QE by the end of 2014. The fact that they didn't is my successor's fault, not mine".
The Bernank is technically still the Fed Chair until Saturday so I think there is a 0% chance of a hike in QE, at least for this meeting. Instead, I see this:
- A 50% chance of a further reduction of the stated number by $10B/month. IF this happens, do not be surprised if the entire $10B is taken from the MBS side, leaving the total stated number at $40B treasuries and $25B MBS.
- A 10% chance that the only reduction or "taper" is $5B/month off of MBS, leaving the stated number at $40B treasuries and $30B MBS.
- A 40% chance of no change at all due to "economic conditions", "emerging markets", whatever excuse they need to borrow this month.
Why would they need an "excuse"? Just be sure to check these charts before you post your personal prognostication: