Fed’s Announcement Leads To Sharply Lower Bond Yields And Dollar Bearishness

The Fed’s announcement that they would purchase up to 300 billion of long dated treasuries over the next 6 months led to a sharp decline in the 30 year bond yield.  The yield on the bonds has fallen from 3.8251 at yesterday’s close to 3.5033.  The effect on mortgage rates will also be of interest as a stimulus.  The Fed also said they buy up to an additional 750 billion of agency mortgage backed securities.

All of the actions should be a stimulus to the US economy. However, it is also bearish for the dollar as it increased the deficit and the flight to safety of the US dollar will lessen as the economy recovers.

The kitchen sink was thrown in today by the Fed.

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