Thursday, September 30, 2010

Fed Policy to Drive 10-Year Treasury Yields Below 2%

Fed Policy to Drive 10-Year Treasury Yields Below 2%, BT Says; Bloomberg

This should make us all feel so much better about our economy...

Yields on 10-year Treasury notes will drop to a record low as the Federal Reserve expands its program of government debt purchases intended to keep borrowing costs down, BT Investment Management Ltd. said.

The Fed moved closer to a second wave of so-called quantitative easing by focusing on inflation in a statement following its Sept. 21 meeting, said Vimal Gor, the Sydney-based head of income and fixed interest at BT Investment. Policy makers said for the first time that day that too-low inflation, in addition to sluggish growth, would warrant taking action.

“The strongest conviction trade I have is to be long U.S. bonds because the Fed has told you they’re going to buy,” said Gor, who oversees A$12 billion ($11.6 billion). “The Fed will do whatever they need to do to inflate the economy in the U.S.”

The benchmark bond yield will decline below 2 percent, breaking its December 2008 low, once the Fed acts, Gor said.

Read the rest of the Bloomberg article here.

Comment: And what is the Senate doing about this or the economy...reader can fill in below.

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