US MARKET REPORT

RISK ON AS FED PUMPS OUT $600 BILLION
World stocks rose strongly, touching new two-year highs, demand for emerging sovereign debt increased and the dollar fell on Thursday as the afterglow of the Federal Reserve's asset buying plan spread across markets.
Wall Street looked set to join in the stock rally.The Fed on Wednesday said it would spend would spend $600 billion buying longer-term Treasury bonds through to the end of next June as part of a renewed quantitative easing (QE) program.

This was a little more than expected, but not enough to spook markets with worries about a worse-than-anticipated U.S. economic picture.

Investors were also plowing into traditionally more risky emerging market sovereign debt. The yield spread between emerging market debt and U.S. Treasuries as measured by JPMorgan narrowed to levels last seen nearly three years ago.

DOLLAR DUMPED
The main "victim" of QE is the U.S. dollar which is effectively devalued by the printing of new money to buy the $600 billion in assets.The dollar was down sharply, hitting a 28-year low versus the high-yielding Australian dollar, and losing around three quarters of a percent against a basket of major currencies .DXY.

The Fed's commitment to purchases of Treasuries, implying low funding costs, brought into focus an expected increased use of the dollar in carry trades, in which the U.S. currency is used to fund purchases in commodities, emerging markets and higher-yielding currencies.