FXWire Pro Headline | February 12 2013 5:29 EST
Quotes from Standard Chartered:
-The Fed officially conducts bond purchases as part of its QE policy (USD 40bn of Treasuries are purchased each month out of the USD 85bn/month asset-purchase programme), primarily to keep market borrowing rates low.
-This is intended to boost financial conditions for mortgage holders and corporates, as well as support asset prices, not to help to fund the federal budget. In practice, QE brings significant benefits to the government as well by maintaining low interest rates.
-The average 10Y Treasury yield was 1.79% last year, compared with a 10-year average of 3.74%. One concern is that low government yields make it easier for Congress to avoid tough budget decisions. Still, we believe the Fed is firmly committed to maintaining easy monetary conditions for several more years.