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Implications of further quantitative easing on the dollar, international equities and commodities

September 19, 2012

Investors should use the recent strength to rebalance portfolios and remain broadly diversified to help navigate possible upcoming surprises.
-Sameer Samana, international strategist, Wells Fargo

Implications of further quantitative easing on the dollar, international equities and commodities

Last week, the U.S. Federal Reserve announced a third round of quantitative easing in order to bolster economic growth and speed up recovery in the labor market. The Fed's actions came on the heels of the European Central Bank's plan to buy unlimited amounts of short-term euro zone sovereign bonds in order to help keep borrowing costs low. While both programs should support international equity and commodity markets and be a negative for their respective currencies over the long-term, in the near-term markets may have discounted much of the news. In our opinion, investors should use the recent strength to rebalance portfolios and remain broadly diversified to help navigate possible upcoming surprises.

 

 

 

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