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he Federal Reserve will probably allow its $300 billion Treasury-buying program to end over the next six weeks as signs of a housing recovery prompt the central bank to unwind one its most aggressive and unusual interventions into financial markets, big bond dealers say.
With the Fed no longer a constant, large buyer of Treasury notes and bonds, benchmark yields and mortgage rates will likely rise. But that threat isn't expected to prompt policymakers, some of whom have expressed increasing alarm over the prospects of higher inflation from the Fed's ultra-loose monetary policy, to extend the program.
"The Fed is likely to reinforce that they are not going to be in the market after the $300 billion is up," said Ajay Rajadhyaksha, head of U.S. fixed-income strategy at Barclays Capital, one of the 18 primary U.S. government security dealers that trade with the Fed.
Fed policymakers led by Fed Chairman Ben Bernanke will update markets on their outlook for the U.S. economy and their efforts to revitalize credit markets on Wednesday at the end of their two-day meeting.
Analysts at primary dealers Barclays, RBC Capital Markets and Nomura Securities say they anticipate the Fed will likely keep its two main policy tools, near zero-interest rates and special liquidity programs, as they stand. It's not ready to raise interest rates, nor does it likely see the need to expand programs designed to drive down borrowing costs by buying bonds from private investors.
The Fed said in mid-March that it planned to buy $300 billion in Treasury bonds and notes over six months, a period that will end in late September. It's bought an estimated $243 billion so far, says Morgan Stanley. If it keeps up its past pace, the program will run out of money over the next month.
Analysts don't anticipate policymakers will try to revive it. At its last interest-rate setting meeting, in June, the Fed said it would "continue to evaluate the timing and overall amounts" of its purchases in light of economic and financial market conditions.
President Barack Obama said Friday his administration had saved the US economy from catastrophe and the worst of the recession may be over, after a surprise drop in the unemployment rate.
"This morning we received additional signs that the worst may be behind us," said Obama in remarks in the White House Rose Garden after new figures showed the jobless rate slipped to a better than expected 9.4 percent in July.
Originally posted by pause4thought
...I suppose that's why they've been quietly planning to pull out of component manufacture to build their own vehicle from scratch, as it were. They've developed enough links with foreign sources of raw materials to start to go it alone.
Are those who are concerned about medium & long-term gains just a minority?
I'm looking forward to being educated on this one.
OH HELLS BELLS!!! I am still catching up on the news today & about wasted my booze on this one
President Barack Obama said Friday his administration had saved the US economy from catastrophe
did you know that all those cars, which will have engine seize put in them & then shredded or crushed as part of the cash for clunkers program will ultimately be shipped to hHina for them to have new raw materials????
Unfortunately, it seems today that many "investment companies" are only focused on what they make & not what YOU make
Even the companies that ran the funds for the public's 401Ks were not worried about making the best decisions for the client as so many saw 40% of their "savings" evaporate last year.
The investment companies get commissions and kickbacks from other smaller fund groups (read mutual funds) to sell their products.
The ONLY person that really cares about your money is YOU. SO if you want to invest for the future, then learn how to do it for yourself.
Originally posted by Rockpuck
... turns out the mother board passed away sometime last night. After the wake, I guess ill buy a new PC..