Robert's Stochastic thoughts

Thursday, March 19, 2009

Dueling Headlines

New York Times

Fed Plans to Inject Another $1 Trillion to Aid the Economy
EDMUND L. ANDREWS
Published: March 18, 2009

Washington Post

Fed to Pump $1.2 Trillion Into Markets
Greatly Expanded Purchases Are Designed to Lower Interest Rates, Stimulate Borrowing
By Neil Irwin
Washington Post Staff Writer
Thursday, March 19, 2009; Page A01

The extra $ 200,000,000,000 is not due to the passage of a day. The current front page of http://www.nytimes.com/ includes

Fed’s Move Still Shaking Up Markets
By JACK HEALY 20 minutes ago
The Fed’s decision to inject $1 trillion into the economy pushed the price of government bonds higher and dragged down the value of the dollar.

1 comment:

Anonymous said...: The figure is 1 trillion 50 billion dollars in long or longer term bond purchases, the only problem is that all the announcement does is frighten me as a bond investor to sell long positions immediately though investors have been steadily selling for months.

If Krugman is right the fed will fail to end the liquidity trap for quite a while, but caution is to continue to reduce portfolio durations from here.

The Vanguard GNMA portfolio duration is 1.8 years.; 8:01 PM