Wall Street believes May's disappointing jobs numbers raise odds of Fed move on QE3 in June or July

06/04/2012 6:07 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

A survey of 60 money managers, investment strategists, and economists conducted by CNBC on Friday and Saturday after Friday morning’s disappointing jobs numbers shows that Wall Street thinks the Fed will launch a new round of quantitative easing.

58% of those surveyed expect a new stimulus program from the Fed sometime in the next year. That’s up from 33% in the Fed’s survey six weeks ago. 42% of those who think the Fed will move this year expect action at the central bank’s June 19-20 meeting. 47% think the Fed will wait until its July meeting. Virtually no one thinks the Fed will move in September (8%) and no one responding to the survey expects action in either October (0%) or December (0%.)

Survey respondents who think the Fed will launch a new round of quantitative easing voted overwhelmingly for an extension of the Fed’s Operation Twist (42%) as the most likely form of a Fed move. Operation Twist, which comes to an end in June, saw the Fed selling short-term Treasuries and buying longer-term Treasuries in an effort to lower long-term interest rates.

The CNBC poll echoes a Reuters poll (also conducted on Friday) of the 15 primary dealers that do business directly with the Fed. Those responding to the poll say there’s a 50% chance that the Fed will launch another round of quantitative easing. That’s up from a 33% chance in the May 4 version of this poll.

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