The announcement of this new asset purchase program should be a big positive for treasuries, right? Turns out that it wasn't. Longer dated treasuries rallied immediately after the announcement, but sold off shortly after, now trading at the lows for the week.
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With the FOMC doves running the show, the Fed announced it would target a specific combination of unemployment and short-term inflation expectations.
Bloomberg: - Thirty-year yields reached a one-month high after the Federal Open Market Committee said interest rates will stay low "at least as long" as the jobless rate stays above 6.5 percent and inflation "between one and two years ahead" is at no more than 2.5 percent.
Bloomberg: - "The Fed is losing some of its credibility as an inflation fighter," said Gary Pollack, who helps manage $12 billion as head of fixed-income trading at Deutsche Bank AG's Private Wealth Management unit in New York. "They will allow inflation to go above the long-term target. That's disappointing for the market."