If the Fed were to implement further action, we may see an additional quantitative easing plan (QE3), another operation twist where interest on long-term debt is artificially lowered or interest rates could be extended to beyond 2013.
However, Abigail Doolittle for Peak Theories Research argues that we may not see another quantitative easing plan until we experience steep deflationary pressures since it can not be easily remedied with a simple interest rate hike or drop.
“It would seem more appropriate to keep that controversial policy option on the shelf until it is needed as it may sure be needed considering the slide in global growth and the continued pressures of deleveraging,” Doolittle said.
In Europe, investors were looking for more bond buying from the European Central Bank, which meets later this week. “ECB President Mario Draghi indicated late Monday that bond purchases with maturities of up to three years would not violate the bank’s mandate,” MarketWatch reported.
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Max Chen contributed to this article.
For full disclosure: Tom Lydon’s clients own GLD.