FED To Buy Treasury Bonds
Stocks fell 100 points today after the market decided that the FED move yesterday wasn’t all that great.
Bonds continued their massive drive upward in value (decrease in interest rates), and the 10 Year Treasury is now exploring whether it might break through 2%.
The Dollar continued its massive fall in value, falling another 3 to 4 cents today – that’s about 14 cents in 3 days – a massive route of the Dollar.
Gold continued climbing upward and ended today at $869. Do you remember when it was about $700 just a very short time ago. What a massive rally has taken place. I hope the readers got their fair share of gold.
Oil fell and is threatening to breach $40/barrel on the downside. Gasoline is acting contrary to oil right now. Gasoline has stayed in the range of $1.00 to $1.10 while oil is blowing from $40 to $50 – a much bigger percentage swing. Something is going on in the gasoline market – and I wonder if it’s speculation?? The oil and gasoline market are important to watch now as they strongly influence the US economy as a whole, and hit our individual pocketbook directly at the pump.
In the news today…..
More on the FED’s plan to do whatever’s necessary for the economy. The FED plans to knock down longer term interest rates by purchasing Treasury Bonds. Why??? Longer term interest rates influence other interest rates, especially home mortgages and auto loans. If the interest rates for homes and autos can be brought down, then some of the fundamental problems in the economy will be being tackled. Lower home interest rates will encourage more home buying. Lower auto loans will encourage more car buying. These will help, but not necessarily solve, the financial problems we are seeing today.
OPEC has announced that they will cut production by 2,200,000 barrels per day. The reaction of the oil market was irrational in my opinion. The price of oil fell. The reason given was that oil market players were disappointed that the cuts were not greater. A rational response would have included an estimate showing how much less demand exists, or will exist, in the world given the economic slowdown. But, I’m not surprised because markets are irrational (just like people.)
Here are Today’s numbers:
Dow Jones 30 Industrial – 8824 (down 100 points)
10 Year Treasury Bond – 2.19% (down 0.17%)
Euro – $$1.4410
Gold – $869 (up $26)
Oil – $40.06 (down $3.54)
Gasoline – $1.01 (down $0.03)
