Fed, Citing Slowdown, to Buy U.S. Debt.

[elleng]

The Federal Reserve acknowledged on Tuesday that its confidence in the economic recovery had dimmed, and announced that it would use the proceeds from its huge mortgage-bond portfolio to buy long-term Treasury securities.

Saying it would buy relatively modest amounts of government debt, analysts said the Fed signaled that it had no intention to back away from steps that it took, starting in 2007, to prop up the financial and housing markets. While the central bank held off on taking more aggressive steps, like a new, huge round of asset purchases, it left open the possibility that additional easing of monetary policy could take place in the fall if the recovery were to continue to weaken.

The Fed’s new stance marked the completion of a turnabout from a few months ago, when officials were discussing when and how to eventually raise interest rates and gradually shrink the $2.3 trillion balance sheet the Fed amassed through its response to the 2008 financial crisis.

http://www.nytimes.com/2010/08/11/business/economy/11fed.html?_r=1&hp

[jtuck004]

1. They would have figured it out earlier if they read DU. n/t

[dixiegrrrrl]

2. Fed HAS been buying Treasurys all along.

This is also an admission that no one else is stupid enough to buy them, so the Fed. HAS to.

THAT is very indicative of the economy tilting over the edge.

[A HERETIC I AM]

3. BULLSHIT.

"This is also an admission that no one else is stupid enough to buy them, so the Fed. HAS to."

Bullshit. The yield and coupon rates on the ten and thirty year Treasuries are at or near historical lows. Yields don't get this low because "no one else is stupid enough to buy them".

It is a supply and demand thing. Demand for these securities is high and THAT is why their prices get bid up to the point that the ten year is yielding less than 3% and the 30 year is yielding 4% on 4.375% coupon paper.

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

[SarahB]

You're still trying to paint a rosy picture?

After all of this time? In spite of all of the evidence?

[elleng]

6. nevermind

[A HERETIC I AM]

8. How the hell is what I wrote above "trying to paint a rosy picture"?

I simply stated a fact. Bond yields are low and they don't get that way if there is no demand, full stop.

Perhaps you and dixiegrrrl should learn just a little more about how the Treasury Bond market works and what it is made up of.

[SarahB]

5. Dupe nt

[snot]

7. Have you seen this?

http://www.financialsense.com/contributors/rob-kirby/the-extinction-of-the-bond-vigilantes .

A very smart broker I know who specializes in bonds said he couldn't refute it.

[girl gone mad]

4. I doubt it will be very effective...

but they can't say what many know is true. They are out of bullets and the zombies are closing in.