September 21, 2011 - Fed Announces Sales Program of Bonds
The Fed has announced (225p today) a $400 billion sales program of short term bonds (2 year) and a purchase (with sale proceeds) of an equal amount of longer term (10 bonds) bonds (now yielding 1.56%) - 3.25% for 30 year bonds. It is uncertain this program will reduce interest rates and spur investors to migrate toward more risky (higher yield) investments; short term U.S. bond rates remain at near zero as a result of the policy and the U.S. Capital markets. Further, three Fed governors voted against the program decision. The U.S. Dollar has depreciated dramatically over the past 18 months, compared to other countries' currencies.