The big question these days is this: “When will the Federal Reserve System start to taper off its purchases of U.S.Treasury debt and Fannie/Freddie debt?”
The commonly held view is next month.
A Reuter’s reporter went up to David Kotok’s annual gathering at Leen Lodge in Maine. He brings in 50 or so big names in the investment world. They can chat with each other. There are formal presentations.
She asked several of them when the FED will taper. The answer was unified: not soon.
Pippa Malmgren said it best: if the FED moves from buying 75% of the Treasuries issued this year to selling them, the market will react violently. She was not talking “taper.” She was talking “exit.” There will be no exit, she said. These bonds will remain in the FED’s portfolio.
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