That's another concern. FF is going up w/o an official tightening. Like I said, what all this means for 2011 is another story. Right now, my plan is that the big payroll #'s and falling UE rate - which chould cause a sharp rise in yields - will represent a buying opportunity. I think all of this stimulus, census hiring, and political chicanery can keep the illusion going through the election, but that it all falls apart again in 2011. I'll give more precise timing on all of this is when I know it myself!
This seems to be happening for technical reasons and not for the bloomberg theory that traders are betting the fed will move The revival of the SFP is creating tons of UST bills, which has raised their yields along with all short-term rates that are equivalent in nature as ways to park short-term cash(FFs and repo markets)
The most recent spike is not about the SFP, but rather the GSEs gently withdrawing from lending in the FF mkt (for a variety of reasons).
The 3M bill yield has been going straight up for 1 month. I'm sure some of this is the result of SFP issuance http://www.bloomberg.com/apps/cbuilder?ticker1=USGG3M:IND
Interestly enough even though FF has been going up, libor has not been affected a ton. As a result libor-OIS is at record lows, this seems quite unsustainable http://www.bloomberg.com/apps/cbuilder?ticker1=.LOIS3:IND
As I mentioned, some of the earlier movements were definitely due to the SFP, as well as some bill maturations... However, most recently, the color I am getting from the mkt is that it's all about the GSE activities (specifically, the hoarding of reserves by the GSEs arnd the P&I payments, which have been volatile, esp in light of the buyouts).
This is hilarious http://www.bloomberg.com/apps/news?pid=20601087&sid=a0QPKWbZEtvQ&pos=8 Tiger is back, will play the masters. Just a few weeks after saying he might not play for the whole year. But I dont think fading him here is a money maker as it used to be
The first hike comes in Sep 21 at the earliest. The question is how till David Greenlaw says 'we are updating our view for a fed hike to the 4th quarter'