WEDNESDAY AUGUST 12, 2009

Fed Day

Today is Fed Day. The day the Federal Reserve Open Market Committee (FOMC) completes its 2 day meeting and provides a statement to the markets, typically at 2:15PM. Hardly a soul expects the Fed to change interest rates at this meeting. The market’s focus will be on the Fed’s balance sheet and the various programs designed to support the economy.


 

One such program, the Fed’s purchases of U.S. Treasury notes and bonds, will be closely watched. In theory, by purchasing government bonds in the open market, the Fed is helping to suppress interest rates and thus help the economic recovery.  If the Fed changes this purchasing policy, look for interest rates to come under pressure, as the bond market is well aware of the massive supply of government bonds coming down the road.   If the Fed is not there to help consume that supply, watch out!  Interestingly, the yield on the ten-year treasury has been creeping up as of late, increasing from 3.30% on July 10th to 3.65% today.  Perhaps the bond market knows that, sooner or later, the Fed is going to cut back these policies.

 

POSTED AT 1899-12-30 09:37:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

RECENT POSTS

Targeted and Temporary


Better Unemployment Number


The "Safety of Bonds" Myth


Just like that!


Ugly August


Bright Side of Double Dip Fears


All eyes on Wyoming


Lack of Business Confidence


Are bonds forecasting a double dip?


Are rates too high?

The opinions expressed here do not represent the views of Alliance Financial Corporation and Alliance Bank, N.A. This communication is not an offer or solicitation for the purchase or sale of any security, is for general informational purposes only and does not provide personalized investment advice. When making personal investment decisions you should consult your investment adviser or rely on your own research. Copyright 2008.