Three failed strikes for the Fed?

 EmailPrint This Post Print This Post

It has now been three weeks since the Fed formally announced its $400 billion Operation Twist program on September 12. However, if early indications are a sign of what’s to come, as highlighted by Bespoke Investment Group, this will be the third straight time the Fed has tried and failed to lower long-term interest rates through the Treasury market.

Bepoke said: “The chart below shows the yield on the ten-year US treasury going back to September 2008. The red dots in the chart represent each time where the Fed formally announced intentions to buy Treasuries in the open market (QE1, QE2, and Operation Twist). As shown, following each of the prior two announcements, the yield on the 10-year rose by more than 100 basis points (bps) in just a matter of months. Following its most recent announcement in September, the yield on the 10-year is already up 36 bps.

“While one could argue that yield declined ahead of each of the prior announcements due to the fact that each move was widely telegraphed, at face value it appears that the Fed’s attempts to lower long-term interest rates have been futile.”

Source: Bespoke Investment Group, October 14, 2011.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

More on this topic (What's this?)
Anticipating The Rate Hike
Rising Interst Rates Historically A Positive For Equity Returns
You can't really see it on this chart so you'll have to trust me
Read more on Federal Reserve at Wikinvest
OverSeas Radio Network

Leave a Reply

  

  

  

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Top 100 Financial Blogs

Recent Posts

Charts & Indexes

Gold Price (US$)

Don Coxe’s Weekly Webcast

Podcast – Dow Jones


One minute - every hour - weekdays
(requires Windows Media Player)
newsflashr network
National Debt Clock

Calendar of Posts

October 2011
MTWTFSS
« Sep Nov »
 12
3456789
10111213141516
17181920212223
24252627282930
31 

Feed the Bull