Treasurys Rebound as Fed Buys
QE3 signaling has already begun, because these gushes of liquidity are what the primary dealer banks are using to repair their balance sheets, primarily from their trading desks. The trouble is that the exposure to toxic mortgages is historically unprecedented - quite shocking, really, underscoring the fiduciary irresponsibility state protections can cause.
Dr. Bernanke has said, the fog over the green is so thick he is going to hit some small approach shots till the pin becomes visible, so that is what is in operation. For a trader that is a clear enough signal, we know how to discount that. For the economy of course it is enervating to continuously be thwarted in discovery of real market interest rates. A tug-of-war between the Fed and the bond market may develop. If both central banker and market get obstinate at once, but in opposite directions... do I really need to go on?
Treasurys Rebound as Fed Buys
As Rates Increase, Fed's Resolve Likely to Rise, Too
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