According to a report from Morgan Stanley, the Fed is expected to provide additional stimulus after its present attempt unwinds following a report that indicated job increase in May.
Additional Central Bank strategy action also increased to 80% from the last 50%. This came after the labor department announced a job increase in May. The report showed that US employers added 69,000 new jobs in May following an increase of about 77, 000 new jobs in April. More than 85 economists that were interviewed by Bloomberg had predicted an increase of about 150,000 jobs.
David Greenlaw, an economist at Morgan Stanley, sent a letter to customers saying that any hopefulness associated with job market over the winter season is slowly fading away with fiscal conditions tightening considerably since April’s FOMC meeting. The Fed is expected to do everything possible to offer assistance.
U.S central bank is almost done with its project of replacing $400 billion of near term liability in its investments with longer maturities before the end of June to boost the economy by reducing interest rates. The plan, labeled Operation Twist, will be closed this month. The next FOMC meeting will be on 20th June.
According to Bloomberg, the standard 10-year acquiesce dropped 9bps to 1.47% New York time. Thirty-year bonds yield dropped by 9bps to 2.55%, hitting 2.5089% beneath the record 2.5090% that was experienced in Dec, 2008. Fed figures starting from 1953 were also put into consideration.
Morgan Stanley is a primary dealer that trades directly with Central Bank. It is among the 21 main dealers trading with Central Bank.