Pulling Back on QE3As part of its third round of quantitative easing the Federal Reserve has been making monthly purchases of $40 billion in long-term mortgage-backed securities and $45 billion in long-term U.S. Treasury bonds since September of last year, in an attempt to hold long-term rates down. The FOMC at its next meeting September 17-18 is expected by many economists to begin a modest reduction of the central bank's monthly bond purchases, in light of comments by committee members over the past few months. The market has pushed the yield on 10-year U.S. Treasury bonds up to 2.89% from 1.70% at the end of April. The yield on the 10-year did decline by two basis points on Friday, mirroring the stock market's reaction to the disappointing economic reports.
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