According to an article in Bloomberg, economists at Morgan Stanley, Bank of America and JPMorgan Chase see greater odds for a third round of asset purchases by the central bank known as quantitative easing, or QE3.
Therefore, investors are positioning to benefit from a third round of debt purchases by the Federal Reserve, acquiring mortgage securities they’ll be able to sell to the central bank at higher prices, reports Jody Shenn.
Morgan Stanley estimates the chances at 80%, up from 50% last month, and expects that the Fed would expand its mortgage bond holdings by about $200 billion.
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