Most people who follow the US economy are aware of the expiration of QE2 in June. To summarize, QE1 and QE2 were forms of economic stimulus after the recession meant to reduce the supply of US Treasuries and increase the money supply. In practice, the Fed is buying about $3.5 billion of Treasuries daily, keeping yields low and providing incentive to invest in riskier ventures or securities.
I’d love to hear some independent opinions on just how QE2’s expiration will affect 1) US interest rates and the US dollar’s relative value, 2) US and world stock values and 3) commodity values.
If possible, please don’t read other posters’ responses until you’ve posted. I’m trying to see if we can predict what will happen using the Wisdom of Crowds approach.
Here’s my prediction:
The effects of QE2 ending are already priced into these very efficient markets. Thus, there will be no significant changes to rates, stocks or commodity values as a direct result of QE2 ending.