Last night stock market pared losses briefly after the US Federal reserve announced that it would be reversing its Quantitative Easing (QE) exit plan and buying treasury bonds with the money receiving in interest from mortgage backed securities.
The initial reaction was a spike , but enthusiasm soon waned as traders pondered the implications of the Fed's actions. The Fed is taking these steps because the recovery has lost momentum, which opens up the possibility of a double dip recession.
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