I noted this morning Bernanke's November 2002 speech in which he said that the Federal Reserve could, among other things, target long-term interest rates. So it is not a complete surprise that he would hint today at the potential for such a policy response.
Nevertheless, many will be surprised to learn that the Fed is so close to considering such an approach. Bernanke's mention of the strategy in his speech today has pushed the yield on 10-year Treasuries down an additional 14 basis points, bringing the day's decline to 22 basis points and the 10-year's yield to 2.70%, its lowest since 1955.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog NBER Declares Recession 12/1/2008 12:48 PM EST According to the NBER, the U.S. recession began in December 2007.
Tony Crescenzi Blog 10-Year Yields at a Low Since 1955 12/1/2008 11:46 AM EST The decline partly reflects the Fed's program of buying mortgage-backed securities.
Tony Crescenzi Blog Fed Bursts Risk Dam 12/1/2008 10:57 AM EST Fed actions were the most concrete factors behind last week's share price surge.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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