What will Fed buying look like?

S

scriabinop23

Anyone think they'll actually buy the 10-30 year part of the curve?

The analysts are getting bold getting bearish.

Increased savings rates afford increased treasury purchases internally.
 
"One trader noted,and I concur, that traders are now engaged in a game of financial chicken with Federal Reserve as traders attempt to force the Fed’s hand. The Fed has no desire for higher rates and the higher rates defeats the intent of the myriad of plans it has implemented to fight the financial crisis. I do not know what level on 5 year or 10 year notes would invite Federal Reserve coupon purchases. However, in this fragile environment such a level does exist and I think that the street will now probe to discern that level."
 
Quote from scriabinop23:

Anyone think they'll actually buy the 10-30 year part of the curve?

The analysts are getting bold getting bearish.

Increased savings rates afford increased treasury purchases internally.
More...

I have a little TBT and am nervous. The Fed's buying might just crush shorts. However, any sign of inflation or lack of deflation and the bonds will crater. I just wonder if the Fed has already bought and hid the fact. :confused:
 
Quote from scriabinop23:

Anyone think they'll actually buy the 10-30 year part of the curve?

The analysts are getting bold getting bearish.

Increased savings rates afford increased treasury purchases internally.
More...

Historically, yields rose during first part of the great depression after an initial drop... then cratered for a decade thereafter. Kinda like... Japan!
 
It will look like a straight up move in Treasuries for at least 3 days in a row.

It will also be all over the press.

There is dissension within the Fed as to whether and when to do it but when it happens I believe they will announce it.
 
Quote from scriabinop23:

Anyone think they'll actually buy the 10-30 year part of the curve?

The analysts are getting bold getting bearish.

Increased savings rates afford increased treasury purchases internally.
More...


I personally think they wont do it (IMO most likely crash the ES or YM to get the desired outcome) or else they will be left as the only buyer. I'm pretty sure you know how this will end if this happened. This is what keeps me from holding TBT very long.


Bernacke has been doing a good job at getting people to frontrun fed policy though.
 
Quote from scriabinop23:

Anyone think they'll actually buy the 10-30 year part of the curve?
More...

Their jobs and the very independence of the Fed are on the line. They may lose both unless they can get unemployment down and mortgage rates to 4 1/2 per cent.

Unemployment is only going to go up in the months to come.

Congress is already talking about looking at the Fed more closely.

So yes, under pressure, they will be forced to do it (unless the economy tanks so much that rates fall voluntarily, which is quite possible).

Already Lacker is writing dissents saying they should be doing it now.
 
I read news everyday lately of this stimulus getting whittled down by congress (who collectively never went to macroeconomics class), and am ultimately disappointed by the lack of leadership out of the Obama administration to get anything done effectively ... Then I sigh and say to myself: 'Well at least the Fed can push policy through without the congressional red tape'..

If the Fed loses the ability to move flexibly without their hands tied, we are all in big trouble.

Let me say this: Would you trust your money supply to the same people who collectively agree with and write, pass rules like 'Buy American' ?

I mean, lots of complaints about the Fed are justified, but I don't think even the most die-hard small-govt free market advocate would be able to justify this logic. 'Buy American' is just as revelatory of policymaker stupidity/ignorance/corruption as support for corn ethanol subsidies/mandates. It reveals total lack of understanding as such concepts of comparative advantage ... econ 101.

Its a joke that 'buy american' is in a stimulus bill. Buy american is absolutely anti-stimulus... They might as well burn the 800B right after they borrow or print it. There are better strategic ways to address our qualms with China - ways that won't continue to brake the global economy.

I'm happy at least the Fed on some level is a meritocracy... Its better than other 3 branches of govt.
 
Quote from scriabinop23:

Anyone think they'll actually buy the 10-30 year part of the curve?

The analysts are getting bold getting bearish.

Increased savings rates afford increased treasury purchases internally.
More...

Now, we know...:)
 
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