Wednesday, December 8, 2010

A Bond Rush as Treasury Prices Fall

The agreement to extend the Bush tax cuts led to a sharp decrease in prices of treasury bonds. Many people started buying and the equity markets rose slightly higher that day.
The reason people began buying the bonds is because the extension on the Bush tax cuts is seen as something that will raise the deficit and raise the price of borrowing.
-Remember, the Fed is selling $600 billion in bonds through June 2011.

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