If this is true Wall St isn't going to be happy:
"(Reuters) - The U.S. Federal Reserve is likely next week to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, the Wall Street Journal reported on Wednesday.
What the Journal report called a "measured approach" compares with investors' base-case scenario of an initial commitment to buy at least $500 billion in Treasury debt over five months, in an effort to spur lending and to support an economic recovery that is too weak to tame high unemployment.
The Journal gave no source for the report on its website and said that, although details remain to be sorted out internally, the broad outlines have taken shape.
The bond-buying program is likely to focus on Treasury bonds with maturities mostly between two years and 10 years, it said.
The Fed could buy even longer-term bonds, although some officials are reluctant to do that aggressively because it could expose them to long-term losses without much added benefit, it said."
Wall St is expecting a Bazooka from the Fed next week and it appears like they are about to get a BB gun instead.
In today's world of trillion dollar deficits this is the equivalent a gnat on an elephants you know what.
What I find interesting is how the Fed purchases will include two year bonds which are having no problem selling right now.
In fact, last week's 2 year auction sold at record low yields with a bid to cover at a strong 3.43. Why are they pissing away money on this area of the bond curve?
Sometimes I just want to start baging my head of my keyboard when I read articles like this. It's so frustrating watching the Fed piss away hundreds of billions of dollars on something that will accomplish absolutely nothing.
The lack of attention to the long end(which I expected) combined with the small size of the easing in general could explain why this part of the bond curve sold off hard this afternoon.
It's also possible that the bond boys also may have just simply had a temper tantrum this afternoon as the primary dealers come to terms with not totally getting their way with QE2(which is not something they are used to).
I find it humorous that they admitted that they want to avoid treasuries at the long end of the curve because it could expose them to long-term losses.
Well.....It sounds like we can now bank on a QE2. In other words: We are about to officially announce on November 3rd that we are financing ourselves.
Let the amusement begin!!!