Fed to buy securities

[Afishegg]

Can someone please interpret this for me? What impact if any will this decision have on any of the funds in the tsp? Does this mean the F fund will start to decline or the G fund for instance?

Here is the article from the NY times.

http://www.nytimes.com/2010/08/11/business/economy/11fed.html?hp

 

[hessian]

A shorter synopsis - it maybe help. I think they have largely, again, pushed any real solutions out farther in time (hence the implied eyeing of the 30-yr treasuries). Anyone pls feel free to clarify/explain further! The effect of how the market will take this will be interesting, but only guesses can be ventured at this time.
August 10, 2010, 2:53 pm
Fed Brings Out the Medium-Size Guns

"By CATHERINE RAMPELL The Federal Open Market Committee has released a statement from its latest meeting, once again saying that interest rates will stay “exceptionally low” for an “extended period.” It also noted that the recovery had indeed slowed.

More controversially, the committee said it would maintain the Fed’s unusually expansive balance sheet by “reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.” In other words, rather than letting some of the Fed’s more aggressive policy initiatives end as planned, the committee decided to keep pumping money into the economy by investing in longer-maturity debt.

The move caught some economists by surprise.

“We had not expected the Fed to reinvest proceeds at this time and we had not expected them to announce that the reinvestment would be in longer maturity debt,” Dan Greenhaus, chief economic strategist at Miller Tabak & Company, wrote in a note to clients.

The full Federal Reserve statement is below:"
http://economix.blogs.nytimes.com/2010/08/10/fed-brings-out-the-medium-sized-guns/?src=un&feedurl=http%3A%2F%2Fjson8.nytimes.com%2Fpages%2Fbusiness%2Feconomy%2Findex.jsonp

 

[Warrenlm]

Re the investing in 30 year Treasuries, isn't that really bad? Other creditors are moving to short term and it would seem the first sign of auctions probably going bad is our purchasing our own long term Treasuries. Re the maintaining the trebled balance sheet isn't that expected since the fear remains that housing prices could fall a lot more overall? OK, I'll let someone who knows what they're talking about talk now.

 

[Birchtree]

Friends, they are simply priming and pumping up the money supply - M2. Once the November elections are complete they may become more aggressive with quantitative easing. This is actually good for the stock market and risk takers - this is what the Fed wants. Goldilocks wants a slow progressive economic recovery and the bull market will last and be more durable. Shake'em loose and let'em eat bonds until they puke is what I say.

 

[alevin]

Birchie, my e-brokerage recently reduced commissions by 30%, incentive for me to quit sitting on the bulk of my cash and start wasting it on trading, from the looks of it.

I decided to sell my one holding in Roth acct today that was up nearly 20% from when I bought it-cleared a gain of 16%. helps make up for selling the BP way too late. Equal position sizes-small, but I feel better now. Making my list, checking it twice, biding my time. UUP looking good, maybe tomorrow.

 

[Birchtree]

Ah, and it's all tax free in the Roth - not even any paper work. Nobodies business. Glad to see you branched out - try for dividend reinvestments when you can. I'll be holding BP until hell freezes over I'm sure.

 

[crws]

Birchie, my e-brokerage recently reduced commissions by 30%

Who would that be, if you don't mind me asking?

 

[alevin]

Options Xpress. I chose them because you can get a live person on the phone to talk to you and they are service-oriented. but you pay for it. they were at $15/trade, recently dropped to $9.95.

I've made virtually no trades the past several months, sitting on what I have, which is mostly cash and a handful of small positions spread between Roth and taxable accounts that I felt pretty good about when I bought them, most have stayed in a trading range, reasons for buying haven't changed yet.

Haven't had energy to do the research I need to do before making any further buys, but starting to refocus on making a list to research. Meanwhile the $cost/trade just went down significantly for a pipsqueak like me, so waiting and thinking has not been a bad thing for the most part.