QE3 was finally discussed

In the Minutes of the FOMC dated June 21-22, 2011 released this morning, the probability of introducing QE3 was (finally) brought up!

It looks like the FEDS have sufficient data to interpret the health of the US economy. Take note that this was (even) discussed before the announcement of Nonfarm payroll data and Unemployment rate announced last Friday. The Chairman, Ben Bernanke and his team will gather more data on the health of the US economy before taking the right course.

And what was the immediate response to US equity markets? It pared losses for the day and rose more than 50 points above the flat line. As gold rises in tandem to a possibility of QE3, it rose and was quoted at US 1,565 at point of writing. Crude Oil finished higher at US 97.43. (The commodity markets close between 2-3 am Singapore time). The after trading for Gold August delivery was tested at US 1,574.30 (near record highs).

With half hour to US closing, Moody cuts Ireland to Ba1 with outlook negative. As a result the Euro could not hold its high at 1.405x and resumes losses to below 1.40 after the Ireland downgrade. Speculators in turn focused over to US major indices to drive down the indices to the lows of the day.

How would global mindset be played in Asia and Europe tomorrow? The ‘Hopes for QE3’ or ‘Moody’s downgrade of Ireland’. We’ll know tomorrow, wouldn’t we?

For a complete transcript of the Minutes of the FOMC, click here. If you wish to locate the specific paragraph that discusses the above QE3, scroll down all the way to the heading ‘Committee Policy Action’ and read the paragraph immediately above this heading.

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