The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its $2.86 trillion balance sheet to keep interest rates low. While the $600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system. http://www.bloomberg.com/news/2011-...nth-in-treasuries-after-qe2-comes-to-end.html
There's never been a question that QE Lite will continue. It's been going on for a long time now. But if you think $300B in bond purchases over a 12 month period is going to keep rates low given the circumstances, then I've got a bridge to sell you.
Of course, $300 billion is not meant to bring rates down. It´s a liquidity buffer for the rainy days...
Ahhh just read this and just sat back and shook my head once again to say how pathetic this has become. Seems as of now they cant stop buying these treasuries or else they would risk defaulting, and of course who else is going to buy them if the fed doesn't, no one! As I have said many times over Bubble ben bernanke has no backed himself into a corner and there is no way of getting out of it now. Sad thing is he actually thinks this is working.
If they didn't rollover maturing debt it would be the same as removing liquidity from the market... they haven't announced they are going to do that so this should not be unexpected.