sorry, got confused. bonds up, yield down. take it all back. but why is TLT down since Aug? no need to answer. i will investigate and report back
Because the fed buys very little long bonds compared to intermediate bonds. Also, the fed isn't overly concerned about the mtg rate.
I am referring to the coupons on the whole portfolio, rather than MTM, which is irrelevant. Moreover, who cares about QE2? It's piddly in the grand scheme of things...
now it is getting a bit more clear to me but i still don't really get it. 1. i read that only 6% of Fed purchases went into 10+year bonds, basically nothing. 2. TLT (20+year bonds) apparently sold off due lack of demand comparatively to shorter-term bonds. 3. mortgage rates have been going UP since QE2 (following longer-term bond yield?) my question: why is Fed purchasing shorter-terms bonds since it apparently is hurting the housing market?
My thought is that Bernanke is doing exactly the right thing at this time. With the US wallowing (like a pig) in debt, Bernanke's QE2 is causing some of that debt to be paid back with thin-air printed money. At the same time, it has buoyed the US stock market, and the emerging nation stock markets tied to the inflating dollar have had to be reined in (e.g. China's tightening). So it's all a brilliant use of the last bullet in the gun -- until it SUDDENLY stops working and interest rates rocket to double digit levels.
yes...Us dollar will be in a shit-hole by that time(just like the yen,much deeper than it is today) and FED will be FORCED to raise the rates..
... in a shit hole compared to what? Export countries do not benefit from having a strong currency vs the dollar. And why would the Fed be forced to raise the rate if the dollar tanks?
with you no action seems to ever matter. perhaps if you familiarize yourself with the concept of tipping point you would be not so blase about the effects of the Fed action which parallels the action of central banks in 3rd world countries. the difference between the two are the currency amounts and the use of fancy words like quantitative easing to fool the american masses. the fact that it is taking longer in the US is due to deflationary forces and the size of the US economy once these forces exhaust themselves the inflationary bust will follow.. the end result will be the same: depreciation of the currency. instead of individuals devoting themselves to work and industry and production they will be devoting themselves to finding ways to maintain the rapidly falling purchasing power of their fiat currency.
this from the FT might be appropriate for this discussion; full article attached Asia has had enough of excusing the west By Kishore Mahbubani Published: January 25 2011 20:47 | Last updated: January 25 2011 20:47 Most crises are known by their origin, from the Mexican peso crisis of 1994/5 to the Asian crisis of 1997/8. Given there is no doubt who caused our worldâs latest troubles, it should adopt its logical name: the western financial crisis. This reluctance to call a spade a spade reflects an inability to reckon with changes the US and Europe have to make to avoid a repeat. This worries the rest of the world, and Asia in particular â even if western leaders are shockingly unaware of how they are viewed.