'Fed Officials Signal Little Need Now for Further Bond Purchases' - Bloomberg

Discussion in 'Financial Futures' started by hedge123, Mar 7, 2011.

  1. hedge123


    What exactly is going on with the Fed?

    According to Bloomberg, the Fed sees 'little need now for further bond purchases': http://www.businessweek.com/news/20...ttle-need-now-for-further-bond-purchases.html

    After reading the article, I don't see any such clear indication coming from the Fed at all. I know Bloomberg has to write press copy and make catching headlines, but from what I understand there is still a lot of internal division amongst the Fed governors over whether or not to continue the QE2 asset purchase program, let alone a QE3.

    The Fed's interpretation of the data is also very questionable and un-scientific, in my opinion. When they make statements like Treasury markets are “so deep and liquid that there doesn’t seem to be a need” to taper the purchases, I worry when comparing this observation to that of Bill Gross at Pimco, who is basically arguing that the Fed has taken over the Treasury market, most of the liquidity is artificially supported by them, creating a "Ponzi scheme", and has no easy way out of their purchasing plan lest interest rates rise, which the Fed clearly doesn't want to happen: http://www.planbeconomics.com/2011/03/02/bill-gross-who-will-buy-treasuries-when-the-fed-doesn’t/

    So I ask again, what is going on with the Fed?
  2. who cares.
  3. Look up the term "failure to deliver" and the name Rob kirby.

    Also, look up what Antal Fekete says about the Treasury bond Market.

    These two authors have very unique and disturbing views about bond Markets.
  4. hedge123


    I would hope anyone with USD cares, let alone bond traders, seeing as how the Fed has become the world's largest in the U.S. Treasury market.
  5. hedge123


    Thanks for the pointers.

    Kirby has an interesting theory about why treasury yields are so low: http://www.financialsense.com/contributors/rob-kirby/the-extinction-of-the-bond-vigilantes. Not sure how true his assumptions are (1. that bond vigilantes view the Shadow Stats inflation figure as the real figure versus CPI, and 2. credit derivatives are somehow responsible for artificially raising bond prices and crushing yields), but his chain of logic based on those assumptions seems at least plausible.

    I couldn't quite make heads or tails out of what Fekte is trying to argue, however. Here's another person who was similarly confused: http://www.marketoracle.co.uk/Article17194.html
  6. Wow, you're quick :)

    Did you know about these guys already?
  7. Haha, this stuff is real funny... That Kirby guy is smth else! As to the other article, I couldn't even bring myself to read it.
  8. hedge123


    Nope, but I'm always up for learning about interesting people :)
  9. You must have mad skills at the google search - "find a guy and find his biggest critic" in 20 minutes or less.

    Thats a viable skill, I wouldn't let ET be the sole beneficiary.
  10. hedge123


    Thanks a lot. I just became active in the ET community, and so far I'm very encouraged by the people and comments here to continue doing so. A lot of breadth and relative depth considering it's a free and open forum.

    If you know of or can suggest other places to hash out the issues, I'd love to hear about it.
    #10     Mar 7, 2011