2012.06.01 18:07:03 MARKET TALK: Morgan Stanley Sees 80% Odds Of QE3 At June Fed Mtg

12:06 (Dow Jones) The poor US payrolls report pushed economists at Morgan Stanley to predict that the Fed is highly likely to pump new cash later this month. They place 80% odds of new stimulus out of the FOMC's June 19-20 meeting, up from 50% recently predicted. "It will probably be QE3 rather than [Operation Twist 2]," the economists say in a note. "Any optimism related to the improvement in labor market conditions seen during the winter months is now fading away, and financial conditions have tightened significantly since the April FOMC meeting." While they are skeptical that more stimulus will have a significant economic impact, they add that "the Fed is likely to do what it can to provide some support." (min.zeng@dowjones.com) Call us at (212) 416-3100 or email bradley.davis@dowjones.com (END) Dow Jones Newswires June 01, 2012 12:07 ET (16:07 GMT)