Forex Investment and Currency Trading

Fed to buy $300 bln of long-term Treasuries and an additional $750 bln of of agency MBS in order to keep long-term yield very low.  10 year Treasury yields are  down 45bps from 3.00% to 2.55% and the USD has fallen by 250 pts vs the EUR.  Watch for a lot more USD weakness in coming days. 
The FED finally shoots the bullet of full on quantitative easing by promising to buy $300 bn of US Treasuries over the next 6 months.  They also plan on extending more buying of MBS and highlight the TALF.  The trouble with the move is [...]

[Read more →]

This afternoon all eyes will be on the FOMC’s next interest rate decision at 2:15PM. The big speculation over the last few days has been if the Fed is going to announce the purchase of Treasury securities. However, some think that’s unlikely to be the case, since most FOMC members have
clearly back-pedalled away from that option over the last few weeks. The general consensus (aside seems to be that the Fed would like to wait and see how the TALF (which is getting up and running this week) works out before reconsidering purchasing Treasurys. Here’s a sample of some recent comments [...]

[Read more →]

Governments everywhere are trying desperately to stabilize the global economy and financial system, but what may not be fully appreciated is the severe trauma that has hit the US household balance sheet – $20 trillion of net worth destruction that is very likely going to trigger a multi-year reassessment of the cash flows that the boomer population is going to require to cover its post-retirement quality of life. The supply of bonds is rising sharply, to be sure, but do not underestimate
what the demand for income-bearing securities is going to look like in the future. Just as long bond yields [...]

[Read more →]

The Fed has slashed its target for the fed funds rate to a range of 0.00-0.25%, and has begun to shift its focus towards quantitative easing measures and other unorthodox techniques. The latest cut essentially serves to reunite the target for the fed funds rate with where the effective fed funds rate has been operating over the span of the past several months. And with the fed funds rate now essentially as low as it can go, it is only natural that the Fed has begun to pursue other means of adding stimulus to the economy. The Fed now talks [...]

[Read more →]