Today’s Bond Market Notes; Fed’s Buying Bonds to Stabilize Market and Keep Interest Rates Low; Hope to decrease Unemployment Numbers

dow2664

The Federal Reserve will be intervening in an attempt to support the economy in a big way by purchasing $600 billion dollars worth of bonds. What are the effects? The hope is to make the bond market less volatile and stabilize the market overall. Analysts are worried that inflation may be the result however. More specifically, investors are wondering if they should be holding on to their long term bonds because the inflation potentials could be eating away at the returns of these specific bonds. The Feds are signaling that they will focus a bit more on the short term bonds in their attempts at stabilization and thus, the 10-year note and shorter appear to be the area of focus. Right now, there are no major signs of inflation showing in the market. Price stability remains good and so everyone is focused on interest rates and inflation potentials. The purchase of the middle of the road treasuries is helping to keep interest rates low and the Feds are attempting to keep borrowing rates stable enough over the long term. This will allow business owners to feel confident in taking out loans to grow their business and take on new hires. Unemployment is expected to drop as a result. The current rate is hovering around 9.6%. Right now the jury is still out on bonds, interest rate stability and unemployment improvements. Hope the Fed’s more is “stimulating”. Author: Stephen Johnson

Today's Bond Market Notes; Fed's Buying Bonds to Stabilize Market and Keep Interest Rates Low; Hope to decrease Unemployment Numbers