Only four out of nineteen banks didn’t pass the latest round of stress tests. Even the banks that didn’t pass still had excess capital. The yield on the 10 year Treasury has risen to 2.18% this morning from 1.82% at the beginning of February. I think that this is an indication that the market does not think that QE3 is likely now. From the linked New York Times article:
On Tuesday, the central bank said that 15 of the 19 largest financial firms had enough capital to withstand a severe recession. The results, announced two days ahead of schedule, paved the way for JPMorgan Chase and other banks to bolster dividends and buy back shares.
“When you put banks under the kind of dramatic scenarios that the Fed did — and they are still doing well — it tells you how well capitalized the majority of the banks are coming out of this downturn,” said Michael Scanlon, a senior equity analyst with Manulife Asset Management in Boston.