If the following headlines are any guide, a sizeable cohort of Wall Street types expects addditional Fed easing:
"Fewer Investors Rule Out QE3, Citi Survey Shows" (Businessweek)
"Gross to Gundlach Lead Bond Investors Seeing QE3 From Fed" (Businessweek)
"QE3 Is Still Coming" (TheStreet)
And yet, we have this:
A week of voluminous Fed speak has confirmed market suspicions that the Federal Open Market Committee has subtly shifted towards a more hawkish stance on additional easing.
Comments from nine of the 17 FOMC members this week did not, on balance, suggest any imminent shift from the current easy money policy.
But they did underscore the belief that began to take hold with the March monetary policy statement that the central bank, given the current forecast, is not planning a third round of quantitative easing.
Even more significantly, it may not even be planning to extend "Operation Twist," the Fed’s current program under which it sells short-term securities in its portfolio and buys longer-dated paper in order to try and drive down long-term rates. The program ends in June.
Under the circumstances, some might wonder whether the "smart money" types are deluding themselves -- or whether they are the ones who are actually running the (monetary policy) show.
What do you think?