Fed Buys Treasuries

Today’s purchases in the 7-10 year sector were less than impressive. The Fed bought $7 billion in bonds on $23.5 billion in bonds submitted for sale. This larger than average difference between the amount that primary dealers would like to sell and the amount the Fed is willing to buy is a negative for the market. The whole point of the Fed buying program was to create the additional demand for Treasuries that is needed to keep longer term rates low. As today’s operation shows, the program is overwhelmed and without a significant increase in the amount the Fed is willing to buy it won’t have much impact.



Cliff J. Reynolds Jr., Junior Analyst