Federal Reserve Puzzled by Yield Curve

Quote from nazzdack:

1) Default risk
2) Fed policy influences the short-end of the curve. The long-end of the curve is in its own world.
3) The bond market may also be "imposing" discipline on government to not increase taxes too much which leads back to (1). :cool:
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And if I may add :

Who is buying T Bonds at a ridiculous risk premium of 4,53 % ?????? LOL ! Get out and run !
 
Quote from peilthetraveler:

Dont believe them. Its just like walking into a room and seeing spilled milk on the floor and a kid standing right next to the milk.

Grown up: How did this happen?

Kid: I dont know.

Grown up: Did you spill this milk?

Kid: No

Grown up: then who did?

Kid: I dont know

Fed is acting like a kid hoping to not get the blame for all this.
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lol exactly. Couldn't have said it better.
 
I think the Federal Reserve members are probably puzzled by a lot of things, including clamshell packaging, revolving doors, escalators, and the internets.
 
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Quote from IanMacQuaide:

WASHINGTON (Reuters) - The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession.

But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields.


http://www.reuters.com/article/ousiv/idUSTRE54U1NZ20090531

I thought the Feds were financial experts:confused:
Ya mean they can't save us?:p
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Did they really believe that this day would not come? Somehow I find that hard to believe. Time to face the music.
 
Quote from circadian:

I'm telling you that this is the exact opposite of 2004 when the Fed began raising rates, and the 10 year yield began to fall. This is the "conundrum" that Greenspan mentions. This was at the beginning of a multi-year bull market.

Now we're experiencing just the opposite...fed drops rates, embarks on Q.E., and 10 year rates climb. I tend to think that this is a red flag, and a very large one at that.
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Yep.
 
The Treasury market is WAY MORE concerned with Obama's fiscal policy than the Fed's monetary policy. If you don't believe me then take a look at the Bund and the Long Gilt vs. 30 year Treasuries. Everyone is easing but not everyone is spending money i.e. increasing supply, like the U.S.
 
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