It's behind you! The risks of QE2

Legg Mason's David Nelson believes the Fed's second round of quantitative easing should help drive US stocks higher -but not without risks

A reasonably aggressive second programme of quantitative easing (QE2) by the Federal Reserve had been so widely anticipated there was a risk if the event had failed to meet investors’ expectations, US equities could have sold off sharply. Based upon the market’s favourable initial reaction to the size of the Fed’s programme, however, the risk of disappointment appears to have passed. With QE2, the Fed has decided to purchase a further $600bn of longer-term treasury securities by the end of the second quarter of 2011, a pace of about $75bn per month. Together with its continued comm...