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Written by admin on April 16th, 2009

Impending Fed Purchases Increase Treasury Bond Prices

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The recent increase in U.S. government debt prices was due in large part to the activities of traders hedging bets in advance of a second buy out of Treasury bonds by the Federal Reserve. The move was part of the Fed’s $300 billion bid to slash the rates.

The purchase was just one of many that will be made by the Federal Reserve. As such, it, and other activities, is being monitored by traders. Two and three-year securities as well as immediate maturities totally $7.5 billion are still under the scrutiny of some analysts.

The prices of bonds have experienced a drastic drop at the beginning of 2009 subsequent to a government report that suggested that the markets were on firmer footing. This led many to conclude that recession was bound to last for the next several months, at least.

Additionally, the report highlighted the gradual rise of consumer prices. This alone was touted with a note of concern for the direction of inflation. There is a lot of anxiety among analysts and traders in the market about the federal government’s tremendous debt. The fears are not groundless. In fact, some like Scott Brown, a chief economist with Florida-based, Raymond James & Associates, suggests that, “the Fed is sowing the seeds of future inflation.”

Regardless of where the trends are pointing, it comes down to a waiting game. The actions of the Federal Reserve must be borne out over time. It is not a very reassuring thought for most analysts, let alone the consumers that are worried about where the economy is really going. Many still wonder whether the federal government will find sound solutions to the serious debt issues plaguing the United States. The specter of total financial collapse is roaming Wall Street and Main Street alike.

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2. Federal Reserve Gets $2.3 Billion In Commercial Mortgage Requests
3. US Stocks Drop As A Result of Devaluing CIT Shares
4. Another U.S. Debt Purchase In The Works
5. Debt Increase and Budget Deficits Remain Obstacles