CHICAGO, December 6, 2012 – The ultimate size of QE3 is expected to total nearly $1 trillion after extending into the first half of 2014, according to the results of a Marquette Associates, Inc. survey of institutional fixed income managers released today. The QE3 expectations uncovered by the Marquette survey vary sharply compared to an earlier survey of bank economists reported by Reuters in October.
“Banks and especially primary dealers are key players in the U.S. fixed income markets, but asset managers often give us an even better read on expectations,” said Tim Burdick, chief investment officer for Marquette. “Given the open-ended nature of QE3, we thought it was critical to gauge institutional fixed income investment manager opinions.”
The 35 respondents to Marquette’s QE3 survey broadly agreed with the bank economists surveyed by Reuters about the unemployment rate improvement objective of the Fed in implementing QE3. Both economists and asset managers believed the Fed was targeting roughly 7% unemployment on average before terminating the program.
“While the asset managers we surveyed varied widely in their opinions on other aspects of QE3, there was relatively strong agreement on the unemployment number,” said Eric Przybylinski, senior research analyst for Marquette. “Most economists and asset managers also agreed that the Fed purchases of Treasuries will continue after Operation Twist ends at the close of the year.”
Asset manager QE3 opinions beyond the unemployment responses varied widely, including responses regarding the ultimate size of QE3. The median asset manager believed the size of QE3 would be $975 billion, but opinions also clustered significantly on either end of the survey from the range of the Reuters bank economists to more than $1.65 trillion.
The institutional fixed income managers also shared other views on QE3, including the duration, inflation rate and core CPI.
For a briefing on key findings from the Marquette QE3 survey of institutional fixed income managers, please download the newsletter Fed’s QE3 Expected to Total Nearly $1T – Marquette Associates Study.
About Marquette Associates
Marquette Associates is a Chicago-based, independent investment consulting firm that guides institutional investment programs with a focused three-point approach and careful research. For more than 26 years, Marquette has served a single mission – enable institutions to be more effective investment stewards. Marquette places client fiduciary duties first through complete independence and 100% employee ownership. The firm currently serves more than 176 clients with over $77 billion in assets – from public funds, unions and corporations to endowments, foundations and other non-profits.
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