St. Louis Fed Gov Bullard Says Fed Should Continue QE
St. Louis Fed President James Bullard began speaking at about 11:30 a.m. Eastern in Frankfurt about monetary policy in a low-rate environment. He said the Fed should continue with its present bond-buying program and adjust the rate of purchases in view of incoming data on growth and inflation. Bullard, viewed as an independent voice at the central bank, has previously voiced concerns about too-rapidly falling inflation.
Fact is we DO want the fed out of QE so we can stop caring about every single meeting. This will tend toward pushing margins wider, while (hopefully) hedges sustain some book value.
AGNC was caught off guard this quarter - why? Because the fed says they're ending QE late this year or next year sometime. The entire market started acting like it was done TODAY and none of the hedging is in place for such a fed move TODAY. Why would it be?
I dunno about stopping caring about every meeting. Back in the Greenspam days you could hear a pin drop while people tried to decrypt his reports. But I think it's fair to say the market got woken up to the likelihood of change.