Federal Reserve Asset Buying May Reach $2 Trillion, Goldman's Hatzius Says

The Chinese's direct and indirection reaction to polices chosen to fulfill the Fed's 'dual mandate' will be telling. The Chinese have clearly chosen to incorporate actions rather than words to execute their plan. The trend in the dollar and US long bond market should be closely monitored for changes in money flows and technical deterioration.

The massive outflows in the US Long Bond continue to be a major red flag within a tenuous global economic backdrop.

US TBd (20 Years +) and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:

The Federal Reserve may purchase $2 trillion of assets to stimulate the U.S. economy and start by announcing a fresh round of monetary easing on Nov. 3, Goldman Sachs Group Inc. said.

“We expect an announcement of $500 billion or perhaps slightly more over a period of about six months,” Jan Hatzius, the New York-based chief U.S. economist at Goldman Sachs, said in an e-mailed note. “The key question, however, is not the size of the first step, but how far Fed officials will ultimately need to move to achieve their dual mandate of low inflation and maximum sustainable employment.”

Source: bloomberg.com