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  • Bank of America Corp. (BAC) and JP Morgan (JPM) - Quantitative Easing

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    Tuesday Oct. 5, 2010 at 09:40 am EST
     
    Bank of America Corp. (BAC)-
    Quantitative easing to Start Soon 
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    Bank of America Corp. (BAC)and JP Morgan responded in notes to ongoing nod of the Federal Reserve that it will begin quantitative easing again. Federal Reserve Bank of New York Executive Vice President, Brian Sack had recently said at 2010 CFA Institute Fixed Income Management Conference that, "In terms of the benefits, balance-sheet expansion appears to push financial conditions in the right direction and it puts downward pressure on longer-term real interest rates and makes broader financial conditions more accommodative." He indicated that Fed acquiring mortgage backed securities will be a part of quantitative easing and their stimulus strategy.

    BofA and JP Morgan are assuming that comments from Federal Reserve and Sack, are indicative of quantitative easing to start soon, around in November. They said it will have a strong impact on secondary markets. One of the several risk involved with quantitative easing is reasonable to assume that the effects of balance sheet expansion would diminish at some point, said Sack, especially if yields were to move to extremely low levels.

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