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Thread: Fed boosts QE and ties rates to unemployment level

  1. #1
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    Default Fed boosts QE and ties rates to unemployment level

    http://www.telegraph.co.uk/finance/e...ent-level.html

    The central bank replaced a more modest stimulus program due to expire at year-end with a fresh round of Treasury purchases that will increase its balance sheet. It committed to monthly purchases of $45bn in Treasuries on top of the $40bn per month in mortgage-backed bonds it started buying in September.


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    *FED BOOSTS QE WITH $45 BILLION IN MONTHLY TREASURY PURCHASES
    *FED TO KEEP BUYING MORTGAGE BONDS AT PACE OF $40 BLN PER MONTH
    *FED SAYS MONTHLY PURCHASES TO TOTAL $85 BLN
    *FED ADOPTS ECONOMIC THRESHOLDS FOR POLICY TIGHTENING
    *FED: RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%
    *FED: RATES TO STAY LOW WITH INFLATION SEEN AT 2.5% OR LESS

    the only surprise is hard targeting i.e. interest rate will increase of unemployment rate lowered to 6.5% or inflation beyond 2.5% .... of course, the pace of increase can be at turtle speed market thinks the 1st int rate increase might happen in mid 2015

    USD weakening is the only result, market still waiting for fiscal cliff
    Last edited by phantom_opera; 13-12-12 at 06:53.
    Ride at your own risk !!!

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    Could take another year or 2 to get unemploment rate down to 6.5%.

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    Quote Originally Posted by kane
    Could take another year or 2 to get unemploment rate down to 6.5%.
    May take forever.

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    Market priced in 30pc chance of first rate hike in mid 2015
    Still got 2.5y
    Ride at your own risk !!!

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    Quote Originally Posted by phantom_opera
    Market priced in 30pc chance of first rate hike in mid 2015
    Still got 2.5y
    Hi, how you get the 30percent figure?

    Also, it means 70percent chance of 1st rate hike after 2015?

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    So to summarise, is this good news to vested properties owners?

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    Quote Originally Posted by leesg123
    So to summarise, is this good news to vested properties owners?
    heya, even let's say,... if no news, everything stays where it is... that's already good news to vested owners liow...

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    as market expected 85b increase of balance sheet per month, at least Bernanke did not disappoint, after 1y, US Fed balance sheet will be 4T, debt 18T (from current level of 16.3T) at the end of 2013

    Bernanke is a master to keep market flat (or market has completely front-run him?) and slow destroyer of USD Can Mr Khaw keep land price flat?
    Ride at your own risk !!!

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    So will more potential property buyers on the sidelines start to take action? Interest rate so low .. where else to park your cash?

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    Quote Originally Posted by propertychap
    So will more potential property buyers on the sidelines start to take action? Interest rate so low .. where else to park your cash?
    since SG inflation started in around 2005 ... except one year of deflation during Lehman, say this cycle you have 2015 - 2005 = 10y - 1y Lehman = 9y of 6% real inflation

    money in bank 1%, so effectively lose 5%pa ... 9x5 = 45% if you have large amount of $$ in CPF OA even worse ...

    do nothing is not an option but it may be already too late
    Ride at your own risk !!!

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    Keeping the land cost flat is almost impossble unless no more bidding and all use for HDB
    what they can do is perhaps, add in another condition, not the highest bidder will get; but the developer must also come with social economic impact (add in social values). A greener environment, a elderly friendly project, a development which promote 3 or more generation living, etc...that will be a good starting point.

    Quote Originally Posted by phantom_opera
    as market expected 85b increase of balance sheet per month, at least Bernanke did not disappoint, after 1y, US Fed balance sheet will be 4T, debt 18T (from current level of 16.3T) at the end of 2013

    Bernanke is a master to keep market flat (or market has completely front-run him?) and slow destroyer of USD Can Mr Khaw keep land price flat?

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    the recent land bids near MRT all record breaking

    - Jurong East 700psf
    - Tanah Merah 790psf
    - Bukit Merah 975psf / Prince Charles 960psf
    - Bishan 850psf (ok lah maintain)
    - Farrer Road 1107psf

    CAPL, CDL and UOL are now more aggressive than FEO in bidding so sooner or later it will force FEO to be aggressive too
    Ride at your own risk !!!

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    Quote Originally Posted by lajia
    Keeping the land cost flat is almost impossble unless no more bidding and all use for HDB
    what they can do is perhaps, add in another condition, not the highest bidder will get; but the developer must also come with social economic impact (add in social values). A greener environment, a elderly friendly project, a development which promote 3 or more generation living, etc...that will be a good starting point.
    unlikely to set such rules for private developers, only can do it in their own backyard for HDB & ECs ...

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    2013 Redhill to hit selling price of $2,000?

    Let's say...
    2013 ave psf $1400 for new launches islandwide..
    2014 $1600..
    2015 $1800..

    Then dip 20% post 2015
    2016 $1440..

    Can stomach this?

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    Quote Originally Posted by cnud
    2013 Redhill to hit selling price of $2,000?

    Let's say...
    2013 ave psf $1400 for new launches islandwide..
    2014 $1600..
    2015 $1800..

    Then dip 20% post 2015
    2016 $1440..

    Can stomach this?
    no guarantee rate hike will come, market only pricing in 30+% of chance in mid 2015 ... first cut will be 25 basis points only then may wait donkey years again b4 next

    imo, it is more likely that US debt hit 20T in 2016, bond vigilantes may strike to force the interest rate up in that case in 2016, BRICs may reduce USD reserve to near zero
    Ride at your own risk !!!

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    Quote Originally Posted by phantom_opera
    no guarantee rate hike will come, market only pricing in 30+% of chance in mid 2015 ... first cut will be 25 basis points only then may wait donkey years again b4 next

    however, if US debt hit 20T in 2016, bond vigilantes may strike to force the rate up
    Agree. But Bernanke is signalling the market with actual target figures. 2.5% inflation and 6.5% unemployment. Seems to me he is preparing hikes in anticipation of more solid and rapid recovery..

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    Quote Originally Posted by cnud
    Agree. But Bernanke is signalling the market with actual target figures. 2.5% inflation and 6.5% unemployment. Seems to me he is preparing hikes in anticipation of more solid and rapid recovery..
    it may be purely political ... remember unemployment rate does not include those giving up searching for jobs
    Ride at your own risk !!!

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    Quote Originally Posted by cnud
    Agree. But Bernanke is signalling the market with actual target figures. 2.5% inflation and 6.5% unemployment. Seems to me he is preparing hikes in anticipation of more solid and rapid recovery..
    Too lazy to search for latest report...

    http://www.ritholtz.com/blog/2011/05...001-2003-2011/

    To create 1% of the total job market = how many people???

    You determine yourself...

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    Quote Originally Posted by chestnut
    Too lazy to search for latest report...

    http://www.ritholtz.com/blog/2011/05...001-2003-2011/

    To create 1% of the total job market = how many people???

    You determine yourself...
    inline the graph

    Ride at your own risk !!!

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    Quote Originally Posted by chestnut
    Too lazy to search for latest report...

    http://www.ritholtz.com/blog/2011/05...001-2003-2011/

    To create 1% of the total job market = how many people???

    You determine yourself...
    Difficult but not impossible.

    Worldwide inflation will also hit USA. If one believes the inflation story, then hitting 2.5% is not difficult right?

    For unemployment figures:

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    Quote Originally Posted by phantom_opera
    no guarantee rate hike will come, market only pricing in 30+% of chance in mid 2015 ... first cut will be 25 basis points only then may wait donkey years again b4 next

    imo, it is more likely that US debt hit 20T in 2016, bond vigilantes may strike to force the interest rate up in that case in 2016, BRICs may reduce USD reserve to near zero
    Actually this is what the US want, but the rest of the world won't do. In the interest of protecting their own economy the rest of the world won't let USD to depreciate too much. Strong USD is what keeping US inflation artificially low. If BRIC countries reduce its USD reserve, their own currency will fly high. That will kill their competitiveness in a heart beat.

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    Quote Originally Posted by cnud
    Difficult but not impossible.

    Worldwide inflation will also hit USA. If one believes the inflation story, then hitting 2.5% is not difficult right?
    surely, with USD so depreciated now.. (imported) inflation should be quite high for them, no? are they THAT self sufficient?

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    but for BRICs to reduce USD reserve to zero, they need an alternative
    doesn't look like will have better candidates

    JPY will prob match or outperform USD printing; EUR think take another 10 years or so for the banking & fiscal union to form & complement monetary union; RMB mayb another 10-20years

    just stay vested in SGD and SG properties
    i do think it's my good fortune to b singaporean most of the time; "qian shi xiu lai"

    Quote Originally Posted by phantom_opera
    no guarantee rate hike will come, market only pricing in 30+% of chance in mid 2015 ... first cut will be 25 basis points only then may wait donkey years again b4 next

    imo, it is more likely that US debt hit 20T in 2016, bond vigilantes may strike to force the interest rate up in that case in 2016, BRICs may reduce USD reserve to near zero
    Last edited by auroraborealis; 13-12-12 at 10:49.
    if you dont't own any property, you're short. take cover quickly

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    must give it to them, achieving energy self sufficiency so soon
    if they follow china style buying resources elsewhere (like another bro/sis stated in other thread) & pump in more to develop their own argi further, i don't think it's an impossible feat for them

    Quote Originally Posted by Shanhz
    surely, with USD so depreciated now.. (imported) inflation should be quite high for them, no? are they THAT self sufficient?
    if you dont't own any property, you're short. take cover quickly

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    Quote Originally Posted by cnud
    Which is easier to do, bring unemployment from
    1. 10 to 8
    2. 8 to 6
    3. 6 to 4
    4. 4 to 2
    5. 2 to 1

    All above in %.

    Food for thot

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    Quote Originally Posted by phantom_opera
    since SG inflation started in around 2005 ... except one year of deflation during Lehman, say this cycle you have 2015 - 2005 = 10y - 1y Lehman = 9y of 6% real inflation

    money in bank 1%, so effectively lose 5%pa ... 9x5 = 45% if you have large amount of $$ in CPF OA even worse ...

    do nothing is not an option but it may be already too late
    I just effectively about to clean out my CPF OA right on the dot 2 Jan 2013.

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    Quote Originally Posted by chestnut
    Which is easier to do, bring unemployment from
    1. 10 to 8
    2. 8 to 6
    3. 6 to 4
    4. 4 to 2
    5. 2 to 1

    All above in %.

    Food for thot
    They did it from 10% to 8% in 2 years.

    8% to 6% is difficult but not impossible. Another 3 years?

    So 2015 Mr B will resurface...

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    Quote Originally Posted by lajia
    Keeping the land cost flat is almost impossble unless no more bidding and all use for HDB
    what they can do is perhaps, add in another condition, not the highest bidder will get; but the developer must also come with social economic impact (add in social values). A greener environment, a elderly friendly project, a development which promote 3 or more generation living, etc...that will be a good starting point.
    Don't be silly.... gahmen will not say no to increasing revenue. Hey, the civil servants need to beat inflation with their salaries too right?

    As it is, bus captains already too lowly paid.

    Cleaners and healthcare salaries cost are going to go up.

    Plus infra still not up to the mark need additional $ pump in to improve.

    MP and public officials quality lack lustre, full of scammy character, so need more moolah to attract real talents with upright characters.

    Where else to get the money from for all these and more?

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