May Be No Need to Fret About End of Fed Bond Buying

A massive build-up in foreign reserves in emerging markets should snuff worries about the end of the Federal Reserve's bond-buying program, the global head of emerging market research at JPMorgan said on Monday.

The rapid accumulation of foreign reserves and the conservative stance central banks take when investing them means U.S. Treasurys are a major target for those funds, supporting the market as the Fed ends purchases.

The increase in foreign currency reserves last year was about $885 billion, of which 80 percent was held by emerging markets, said JPMorgan's Joyce Chang. By the end of the year, foreign currency reserves are expected to be close to $11 trillion, she said.

"If you think about that number, that's almost 50 percent higher than all of QE2," Chang said. She was referring to the Fed's $600 billion bond-buying program slated to end June 30 that is known as quantitative easing, or QE2.

Read Full Article from CNBC.com

- Posted: 2011-06-10 13:10:26

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