End of QE2 - Scary June is coming next week.
Hopefully it won't be straight down in June as people re-adjust their portfolio's for the end of QE2 at the end of June.
Remember the mkt was crashing last summer before QE2 was announced last week of August and ever since then its been mostly straight up by the market. But that one way highway is fast coming to an end at the end of June.
Because quantitative easing has affected all risk spreads, the withdrawal of nearly $1.5 trillion in annualized check writing may have dramatic consequences.
~ Bill Gross
PIMCO’s Bill Gross is concerned. He’s worried about June 30th, the date on which the Federal Reserve’s latest Quantitative Easing program is set to end. His latest Investment Outlook extends the concerns about U.S. Treasuries which he outlined in last month’s missive.
Gross, like many others, has been a critic of the Fed’s Quantitative Easing programs, wondering “whether [they] actually heal, as opposed to cover up, symptoms of an unhealthy economy.” Among a couple of other factors, its success, according to Gross, depends on “the willingness of creditors to believe in future real growth as a rebalancing solution to current excessive deficits and debt levels.” In the past, Treasury buyers have been 50% foreigners, and 40% public institutions and individual savers, with the Fed purchasing the remaining 10%.