Skip to comments.Why the Federal Reserve will taper in September
Posted on 07/20/2013 8:34:56 AM PDT by Errant
Something peculiar has been going on the treasury market during the latest round of quantitative easing (QE). If we study the chart provided below we find that treasury rates increased as soon as a QE-program was enacted, and fell immediately after its termination. Take the TSY 10 year for example; as soon as QE1 was implemented rates rose rapidly from a low of 2.08 per cent to a high of 4.01 per cent. What is striking about this is the fact that the low was set three days into the program, while the high was set three days after the program. A similar development occurred under the QE2 program. Rates reversed their sharp downtrend from the peak set around the end of QE1. A notable difference in the QE2 cycle was the apparent front-running by the market. Investors had obviously learnt how QE impacted various asset classes, so the rate peak came at the middle of the program, not at the end as witnessed under QE1. Still, the collapse in rates right after the program ended was significant.
When QE EVA was introduced on the other hand, rates remained stable at a low level. Rates started to climb first when hints of tapering to the QE EVA program was provided. This is the exact opposite of what we have seen in previous programs!
(Excerpt) Read more at zerohedge.com ...
For more insight, read some of the comments.
The Fed, Treasury, whatever shill organization of the Government that is printing up $85 billion dollars of electronic scrip a month to pump half into the stock market and the other half to buy its own T-bills CANNOT last forever.
The stock market, glad to have this infusion of stupid money (from the government, what else can it be?) so it can make more money off of it, will slowly wither back to where it should be. Likewise, there won’t be such a market for our T-bills anymore, at least the ones we have been buying.
It’s all nothing but a big damned shill game with no equity to back any of it up whatsoever. The only thing that could possibly hope to back it up is massive, massive taxation. BOLO for it.
Sequester? Anybody say Sequester? It’s only ONE FRIGGIN MONTHS worth of what’s essentially been going on for 5 years!
I agree. What is going to be interesting to see, IMO, will the Fed and its owners, or the US and governments of Europe win the coming battle over QE or Tapering? Or will there be some sort of compromise, or more likely, a war for distraction?
IMO, any brouhaha with EU or Asian Banking interests will likely be assuaged with massive commitments by Obama to bankroll the future resolution of whatever financial disasters there crop up. It is the only thing this fraud of a President has.
The trick is in him throwing enough bones to the stock market (money that is stolen from the citizen and wastefully spent)so they can keep profiting off us. If he has their backing, he’ll always point to it as the first indicator of economic health and bedamned debt, bedamned the taxpayer, bedamned unemployment, bedamned anybody but him.
“Will Americans will shake the pixie dust from their eyes and realize our economic coffers have been cleaned out to pay off the lefts political apparatchiks and doom Americas future?”
We were doomed when we accepted the Federal Reserve and it’s collection agency the IRS. They’ve been milking us like cows for a hundred years.
Americans will scream for the blood of fiscal conservatives and wail for the return of QE to infinity.