I'm still trying to figure out how it can be possible that TLT
broke out/TBT broke down but I I'm still not sure. Of course
Bernanke wants to control the yield-curve, of course USD can be
borrowed for free (if you are a bank....) until at least 2013, but
bonds are not money, it's just the promise of paying you money in a
couple of years. And obviously this promise is not worth very
much.
My question is: Is it possible for government, US Fed, rating
agencies and Banks to keep the yield on US-bonds so low with
their interventions or will finally the market strike back?
I read a lot but still got no answer that satisfies me.
IMHO, the intent of the next 'out of the box' idea from the FOMC
will be to push the 10 year US note low enough (say 1.5%) to allow
30 year mortgages to be offered at 3.5% and/or 15 year mortgages at
2.5%. (with little or no points) over the course of the next 6 - 12
months. FOMC has already stated that short rates
will stay at .25% for the next 2 years. FOMC (except for 3
smart board members) believes low rates will stimulate the economy,
completely ignoring the fact that certain members of the
administration/congress are hellbent againt allowing businesses to
operate outside the shadow of existing laws past these past 3
years. laws on the books with no clear regulations written
(read in the process of being written by an anti-business
administration) means it is safer for businesses to lay low
until they know the cost of hiring and the cost of manufaturing.
it's a vicious cycle and the FOMC is only providing 'cover' for
this entire charade. It's going to get real ugly when the FOMC
decides inflation really exists and they have to raise rates.
the markets will adjust, how quickly will be the issue.... good
trading
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Controlling the Yield Curve....
QE 3 ?
Posted by zwyss on 26th of Aug 2011 at 03:52 am
I'm still trying to figure out how it can be possible that TLT broke out/TBT broke down but I I'm still not sure. Of course Bernanke wants to control the yield-curve, of course USD can be borrowed for free (if you are a bank....) until at least 2013, but bonds are not money, it's just the promise of paying you money in a couple of years. And obviously this promise is not worth very much.
My question is: Is it possible for government, US Fed, rating agencies and Banks to keep the yield on US-bonds so low with their interventions or will finally the market strike back?
I read a lot but still got no answer that satisfies me.
QE3
Posted by hazbin1 on 26th of Aug 2011 at 08:28 am
IMHO, the intent of the next 'out of the box' idea from the FOMC will be to push the 10 year US note low enough (say 1.5%) to allow 30 year mortgages to be offered at 3.5% and/or 15 year mortgages at 2.5%. (with little or no points) over the course of the next 6 - 12 months. FOMC has already stated that short rates will stay at .25% for the next 2 years. FOMC (except for 3 smart board members) believes low rates will stimulate the economy, completely ignoring the fact that certain members of the administration/congress are hellbent againt allowing businesses to operate outside the shadow of existing laws past these past 3 years. laws on the books with no clear regulations written (read in the process of being written by an anti-business administration) means it is safer for businesses to lay low until they know the cost of hiring and the cost of manufaturing. it's a vicious cycle and the FOMC is only providing 'cover' for this entire charade. It's going to get real ugly when the FOMC decides inflation really exists and they have to raise rates. the markets will adjust, how quickly will be the issue.... good trading