URGENT: QE3 May Hit This Week
Only 96,000 non-farm payrolls were added last month, which was well below the 130,000 estimate. To make matters even worse, another previous month revision pushed July's total down to 141,000 from 163,000.
Unemployment dropped to 8.1% but it is misleading. Labor Force participation dropped to the lowest value since 1981 as potential workers stopped looking for jobs.
All of this dire news has led some reputable economists to make a bold prediction: QE3 may be announced at the next Federal Open Market Committee (FOMC) meeting on Wednesday, Sept. 12, and Thursday, Sept. 13.
JPMorgan economists Bruce Kasman, David Hensley, and Joseph Lupton think it is going to happen. In a note to their clients, they stated:
Goldman Sachs economist Sven Jari Stehn joined the growing crowd as well. He stated in a press release:
“We expect the FOMC to announce a return to asset purchases as well as a lengthening of the FOMC’s forward guidance for the first hike in the funds rate to mid-2015 or beyond at the September 12-13 FOMC meeting. Our baseline forecast is an open-ended purchase program, focused on agency mortgage-backed securities.”
In layman's terms, all four economists, two of the world's largest market research operations and a legion of other investors and analysts think the Fed will announce another round of bond purchases to inject cash into the economy by the end of the week.
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