The Price of Treasuries Experiencing Rebound
July 8, 2009 · Print This Article
When the Federal Reserve bought up $6.5 billion debt as part of its plan to buy back $300 billion, the prices of government bonds rebounded by a considerable margin.
There have been some fluctuations in prices on treasury yields, especially after the 10-year yield hit 4% recently. At the same time, the yields are maintaining levels well above their December lows. The link between mortgage rates and Treasuries explains the Federal Reserve’s desire to maintain low yields.
The $300 billion debt buyback was announced back in March and represented its “quantitative easing” program, a plan that was intended to stimulate both demands and lower rates.
One the recent buybacks scheduled would include a purchase of about $6.5 billion in debt that is set to mature between May 2012 and November 2013. This was followed by an undisclosed amount that is set to mature between May 2016 and May 2019.
All of this government spending is also mirrored in the government’s far-reaching effort to stabilize the economy in the throes of recession by a spending campaign of unprecedented proportions. Such stimulus plans must be funded through the government’s sales of record-level debt.
The issue of deficit spending as a method of resuscitating the economy has raised the specter of inflation. The devaluation of the dollar through too much money supply, in turn, will undermine the value of the Treasuries. The treasury bond is vulnerable to inflation since the principal investment is fixed, so the inflation will reduce the value of the asset, particularly over a long period of time.
Thankfully, a new government report quelled such inflation-focused fears. The Producer Price Index (PPI), a method of tracking changes in wholesale prices for domestic producers, increased by 0.2% back in May, a lower percentage than what was predicted. The PPI report offered evidence that fears of inflation are unwarranted.
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Thanks!
Its funny, one of my treasuries was on the fp last Sat at eleven am too … guess that's my time! haha
It will effect the bond rate, and the value of dollar. We will be Greece.
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Stocks Rise, Treasuries Reverse Gains on Services, Jobs Data – BusinessWeek
Yes, but I think it should be pointed out that we started paying an extra amount towards SSI in the 80′s to ” pay for the coming baby boomer bulge”.. But Unfortunately, that money was put into the general fund and immediately spent. The point is, it was funded but congress could not leave it there. Furthermore, we should talk more about how the banksters are stealing trillions from us and our children.
Where did you get that idea? The U.S. has sold $100B in treasuries this past week:
This isn't to say it will be equally successful with the rest of the treasuries it will be trying to sell in the coming months: another $900B by September, and then another $1T following that.
And it is clear that the Chinese have expressed less willingness to buy American debt in the future.
but that doesn't mean they are going to stop buying completely:
As to what happens next, it depends a great deal on just how bad the economy gets.
they are trying to break it. I dont know why. Maybe because the government must take over the entire system because they know something we dont know. Something evil is afoot. My cars are not financed.
It already has. China told him to go scratch, hence the Fed printing $2 trillion last week. No central bank would do that if it weren't a last ditch effort. Putin and Medvedev laughed at Henry Kissinger the day before. I think they sent Kissinger so it wouldn't appear in the Lame Stream Media…and it didn't.
China holds the mortgage to this nation. Bush has debted the U.S. out to her for three generations. IF China were to do something like that, it would only mean a slight change in the guard, so to say. At this point, I'd feel a LOT better with a Chinese Communist regime running the show more than I do with the Republican plunderers we have now.
sure!
Try this. Click on Find Historical Data
http://online.wsj.com/mdc/public/page/2_3020-treasury.html?mod=mdc_bnd_pglnk
wow. three etsy.com members included us in their treasuries today. i feel pklempt. no kidding, really honored.
Then every other country that owes the USA money would say screw you yankee and you wouldn't have a leg to stand on.
Nice, they loan us our money and we pay interest through our taxes! What a scam! We’re screwed folks!
It is a ponzi scheme but what can be done? Nothing — and just think we’ll be paying for it -LOL the joke is on us — again. And they talk about how China treats their people — some one needs to save us!!!
Global sector ETF money flows Thailand (THD) leads all global sectors while US Treasuries (TLT) remain firm domestically; Energy (OIH, XLE, USO) is notably weak through today’s 1st hour Actively Traded Leading Global ETFs
TREASURIES-US bonds rise, yields sink on weak economy
they would import goods from their colonies for a next to nothing price and sell them for substantial profit
The Fed buys and sells treasury bonds on the open market as a means of influencing the supply of circulating dollars in the US economy.
In buying treasury bonds, the Fed effectively increases the quantity of dollars in circulation. Among other things, this may be used to mitigate deflation.
The reverse policy would be to sell treasury bonds on the open market. The Fed may follow this policy if the goal is to take money out of circulation (for example, to mitigate inflation).
My mission, should I choose to accept it, is to make Etsy Treasuries and MobileMe galleries until my fingers are bloody stumps.
So, yeah, he basically identifies the most significant cause of government deficits is war. Maybe we should focus on saving those multi-trillions of dollars we’re pissing away, rather than bickering over a few billion here and a few billion there. Trying to reduce the deficit without stopping the wars we’re fighting is essentially futile. It wasn’t that long ago that we actually had a budget surplus, before we got involved in the infamous graveyard of empires.
So then where is the logic in buying out Treasury securities if "treasuries are set to a $2.05 trillion floor on the Fed balance sheet…"
But remember, though, gold has intrinsic value! Because, um, …
Treasuries increase: You could Save up to $500 on Auto Insurance. If you haven't had a DUI you are paying too much…
It’s not invested in stock, bonds and the like?
Treasuries rose, with the 10-year note poised for its biggest monthly gain since the end of 2008, as minutes of the Federal’s Reserve’s Aug. 10 meeting indicated some officials saw “increased downside risks” to the outlook for growth and inflation.