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UPDATE 2-Wall St sees Fed continuing asset purchases through 2013

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(Globalpost/GlobalPost)

* To see full poll results go to * 11 of 17 primary dealers see Fed asset purchases into 2014 * Fed expected to buy $1 trln under current stimulus program (Adds a poll respondent) By Chris Reese NEW YORK, March 8 (Reuters) - Wall Street expects the Federal Reserve to continue its program of debt purchases through 2013 in an effort to prop up the economy despite evidence of an improved job market, according to a Reuters poll conducted on Friday. All of 17 primary dealers -- the large financial institutions that deal directly with the Fed -- said they expect the central bank to continue buying debt until at least late this year, and 11 of the 17 expect the buying to continue into 2014. The poll was conducted on Friday after government data showed U.S. employers added more workers to their payrolls than had been expected in February and the jobless rate fell to a four-year low of 7.7 percent. Analysts have been speculating when the Fed might wind up the purchase program, although recent statements from Fed Chairman Ben Bernanke and Fed Vice Chair Janet Yellen have indicated they are in no hurry to curtail it. "The Fed will welcome today's jobs report but it won't change the time line on its asset purchases or its policy stance," said Michael Gapen, an economist with Barclays in New York. Several of the dealers said they expect the central bank to taper the size of its purchases toward the end of the year from the current level of $85 billion per month of mortgage-backed securities and Treasuries. "Today's payrolls number doesn't completely change the conversation, but it starts the conversation of tapering earlier, it accelerates that conversation a little bit," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York. While Friday's payrolls data showed improvement in the labor market, economists at the primary dealers said more evidence of economic growth was needed before the Fed would consider quitting their purchases. "It'll take at least another 6 months for gains of this size to persuade Fed officials," said Kevin Logan, chief U.S. economist at HSBC in New York. The median of forecasts from the 17 primary dealers was for the Fed to buy a total of $1 trillion of assets under its latest stimulus program. Forecasts for the size of the program ranged from $750 billion to $2.3 trillion. There are 21 U.S. primary dealers. Of the 17 primary dealers who answered the poll, 15 expect U.S. unemployment to dip to the Fed's target level of 6.5 percent in 2015, while two expect it to reach that level in the fourth quarter of 2014. The Fed has said it will keep interest rates near zero until the unemployment rate falls to at least 6.5 percent, as long as inflation does not threaten to rise above 2.5 percent. The median of forecasts from 16 of the primary dealers was for the automatic government spending cuts that began on March 1, known as "sequestration," to subtract 0.5 percentage points from gross domestic product this year. Estimates ranged from 0.2 percent to 0.55 percent. (Additional reporting by Richard Leong, Karen Brettell, Ellen Freilich, Luciana Lopez and Pam Niimi; Editing by Chizu Nomiyama)

http://www.globalpost.com/dispatch/news/thomson-reuters/130308/update-1-poll-wall-st-sees-fed-continuing-asset-purchases-throu