Federal Reserve NY

Statement Regarding Transactions in Agency Mortgage-Backed Securities and Treasury Securities

On September 13, 2012, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to begin purchasing additional agency mortgage-backed securities (MBS) at a pace of $40 billion per month.  The FOMC also directed the Desk to continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities as announced in June and to maintain its existing policy of reinvesting principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in agency MBS.

The FOMC noted that these actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

Purchases of Agency MBS
The purchases of additional agency MBS will begin tomorrow, and are expected to total approximately $23 billion over the remainder of September.  Going forward, details associated with the additional amount of MBS to be purchased each month will be announced on or around the last business day of the prior month.

Consistent with current practice, the planned amount of purchases associated with reinvestments of principal payments on holdings of agency securities that are anticipated to take place over each monthly period will be announced on or around the eighth business day of the prior month.  The next monthly reinvestment purchase amount was also published today, and can be found here:http://www.newyorkfed.org/markets/ambs/ambs_schedule.html.

The Desk anticipates that the agency MBS purchases associated with both the additional asset  purchases and the principal reinvestments will likely be concentrated in newly-issued agency MBS in the To-Be-Announced (TBA) market, although the Desk may purchase other agency MBS if market conditions warrant.

Consistent with current practices, all purchases of agency MBS will be conducted with the Federal Reserve’s primary dealers through a competitive bidding process and results will be published on the Federal Reserve Bank of New York’s website. The Desk will also continue to publish transaction prices for individual operations on a monthly basis.

Federal Reserve Bank of NY

 

Gold futures rally nearly 2%

Sept. 7, 2012, 10:33 a.m. EDT

Gold futures rally nearly 2% after payrolls report

Bigger Friday percentage gains for copper and silver contracts

SAN FRANCISCO (MarketWatch) — Gold futures rallied Friday as a negative jobs report was thought to be a catalyst for additional U.S. economic stimulus coming sooner rather than later.

Other metals futures tracked gold higher on the Comex division of the New York Mercantile Exchange.

Gold for December delivery GCZ2 +2.01%  advanced $24.80, or 1.5%, to $1,730.50 an ounce, after having gained 0.7% on Thursday as European Central Bank chief Mario Draghi detailed plans to help struggling euro-zone economies through bond purchases.


Reuters

Gold prices hit multi-month highs on Thursday.

U.S. nonfarm payrolls rose by 96,000 in August, the Labor Department reported earlier Friday. This came in well below market estimates around 125,000 and paled compared to July’s revised growth of 141,000 jobs.

The nation’s unemployment rate fell to 8.1%, down from 8.3% in July, as more people checked out of the workforce.

Federal Reserve Chairman Ben Bernanke had expressed concerns about the U.S. labor market during a speech in Jackson Hole, Wyo., last week, boosting hopes that he will push the quantitative-easing trigger at the central bank’s policy meeting next week.

Gold thrives on talks of more easing as it is seen as store of value and a shield against currency debasement. The dollar EURUSD +1.2489%  fell against both the euro and Japan’s yen USDJPY -0.9036%  in Friday’s foreign-exchange trading. Read more in Currencies.

Analysts at Commerzbank said in a note a disappointing jobs report could spur Fed action next month. “This would give a significant boost to commodity prices, and precious metals in particular,” the Commerzbank analysts said.

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Silver steals the spotlight from

Silver steals the spotlight from gold

Demand’s poised to rise, but watch out for silver’s volatility

SAN FRANCISCO (MarketWatch) — Silver has been a top performer among major metals this year, and it looks set to continue to steal the spotlight from gold, with investment and industrial demand for the white metal expected to rise.

“We could see a spectacular performance in silver” during the rest of the year, said Julian Phillips, a South Africa-based editor at SilverForecaster.com. “Silver, in addition to its demand [and] supply disjoint, will attract huge investment demand.”

Already, silver futures prices SIZ2 +2.88%  trade above $32.60 an ounce, up about 18% for the quarter to date and up 17% from the end of 2011. Gold GCZ2 +1.94% , at more than $1,700 an ounce, has seen a quarter-to-date gain of 6% and less than 9% rise for the year.

“Investors see precious metals like silver and gold as hedges against the debasement of paper currencies,” said Elliott Orsillo, co-founder and portfolio manager at Season Investments LLC.

Much of the recent move in both silver and gold has been a reaction to rising expectations for more monetary easing on the part of the European Central Bank and the U.S. Federal Reserve, which tend to devalue currencies.

Orsillo warned that the market might have gotten a little ahead of itself regarding those expectations. “We could see a pullback and a better entry point [for silver] in the next couple of weeks,” he said, noting that silver tends to be more of a “high-beta play,” much more volatile than gold.

 Overall, however, “quantitative easing acts as a catalyst for precious metals,” said Dawn Bennett, portfolio manager of the Bennett Group of Funds.

The Fed’s second round of quantitative easing, or QE, helped lift gold to a closing record of almost $1,900 and silver near $50 an ounce in 2011.

A third installment of QE will likely have an even greater impact and both metals will “retest, if not surpass, 2011 highs,” added Bennett. “While silver trades more volatile than gold, when the fundamentals for the safe-haven trade are in place, it performs extremely well and is affordable for any investor seeking refuge from the equity and bond markets or looking to hedge the dollar.”

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