Rather than reassuring investors, the Fed’s actions and comments yesterday led to a massive selloff in the global equity markets today. As investors fled to the dollar and treasuries, investors also liquidated precious metals to help cover losses. gold is down more than $40 as of 9:15 a.m. PST. While the Fed’s new “twist” program was expected, investors were surprised by the central bank’s announcement of "significant downside risk to the economic outlook.". (Gold Slides as Dollar Gains in Wake of Fed” MarketWatch, September 22, 2011)
Investor sentiment was further affected by the latest U.S. jobless report which was worse than expected. There is also little confidence that “Operation Twist” will help the faltering U.S. economy. "These measures can't make the economy worse, but neither, we think, will they make things much better," said High Frequency Economics chief U.S. economist Ian Shepherdson in a note to client
