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Fed eyes bond purchase
By Jeannine Aversa |
November 12, 2010, Friday
|
Print Edition
Print Edition
THE United States Federal Reserve will buy a total of US$105 billion worth of government bonds starting later this week as it launches a new program to invigorate the economy.
The bonds will be purchased through a series of 18 operations that start today and end on December 9, the Federal Reserve Bank of New York said on Wednesday. The purchases are the first since the Fed announced last week that it will buy a total of US$600 billion worth of Treasury bonds over the next eight months.
The Fed will buy US$75 billion of government debt as part of the new program. And, it will buy another US$30 billion, using the proceeds from its vast mortgage portfolio.
That totals US$105 billion for the first phase of the Fed's government bond buying. The Fed last week said it anticipates buying on average US$110 billion a month.
The Fed's announcement on Wednesday helped boost stocks and bond prices.
The Dow Jones industrial average closed up 10.29 points to 11,357.04.
Treasurys moved higher after the auction of US$16 billion in 30-year bonds and after the Fed laid out its bond-buying schedule.
Through the bond purchases, the Fed aims to push rates even lower on mortgages, corporate debt and other loans. Mortgage rates have sunk to their lowest levels in decades, hopeful of the Fed's action.
The bonds will be purchased through a series of 18 operations that start today and end on December 9, the Federal Reserve Bank of New York said on Wednesday. The purchases are the first since the Fed announced last week that it will buy a total of US$600 billion worth of Treasury bonds over the next eight months.
The Fed will buy US$75 billion of government debt as part of the new program. And, it will buy another US$30 billion, using the proceeds from its vast mortgage portfolio.
That totals US$105 billion for the first phase of the Fed's government bond buying. The Fed last week said it anticipates buying on average US$110 billion a month.
The Fed's announcement on Wednesday helped boost stocks and bond prices.
The Dow Jones industrial average closed up 10.29 points to 11,357.04.
Treasurys moved higher after the auction of US$16 billion in 30-year bonds and after the Fed laid out its bond-buying schedule.
Through the bond purchases, the Fed aims to push rates even lower on mortgages, corporate debt and other loans. Mortgage rates have sunk to their lowest levels in decades, hopeful of the Fed's action.
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