Wheels keep turning
Don't like it but I guess I'm learning...Shock! Watch the monkey get hurt
Peter Gabriel "Shock the Monkey"
The patient has been poked prodded and kept alive with all manner of new drugs and procedures. As the pulse has once again dropped the paddles are coming back out and the amperage upped to 11. Everyone in the room already agrees the subject will remain seriously debilitated even IF the vitals stabilize. His cousin EZ in the next bed is fading even quicker.
It'll "look bad" to abandon Twist so something between 200 and 600B (we think 300B) of MBS type IOUs will be thrown on the Fed's balance sheet. There remains little demand from the public for more debt so the Fed focus shifts back to the "flow" aspect of QE over the much hoped for "stock" theory. QE is by definition the policy tool of the 5th level of Hell (gloomy) so the arguments against more of it are silly.
Two rate differentials to keep an eye on going forward: Euribor has been under dollar Libor for a week now and IBM is dealing 10 year notes at 1.87-ish (moderately over Uncle Sam). As the Monkey gets shocked these rates provide interesting short to medium term positives to the triage charts.
Too much at stake, Ground beneath me shake..And the news is breaking...
Shock the monkey to life.