Fed ends QE; Treasuries rally?

From what I can tell, the Fed basically announced exactly what the market expected: no more $xx billion of price-insensitive demand for Treasuries and MBS per month; a better economy noticed; and rates will stay low for a considerable time.

So this is how the US Treasury Bond futures market waved farewell to QE:

Hurrah!  Less demand going forward!  Wait...what?  Source: thinkorswim by TDAmeritrade

Hurrah! Less demand going forward! Wait…what? Source: thinkorswim by TDAmeritrade

One would (naively) think the end of considerable, price-insensitive, demand would cause prices to fall.  And…no.  Must be that the event-risk of what the Fed could have said came to naught, so life is OK again.

On the plus side, bonds seem to be back to the ‘anti-equity’ trade: equity futures are off since the announcement.  Better keep those long positions in bonds, then…

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s