Economic Stimulus News
On a similar note, there is plenty of speculation that the inflationary pressures in the economy are going to cause the Fed to start reducing their current monthly bond purchases at the November 2-3 FOMC meeting. At $120 billion a month, the Fed is currently a significant buyer of Treasury securities and mortgage bonds. If they start tapering their monthly purchases, it means there is less demand and more supply available in the market, resulting in discounted prices (and higher yields). With that FOMC meeting nearing quickly, traders are taking defensive positions in case the Fed announces a sizable reduction in their monthly buying. If the Fed decides to delay that move, or announce a minimal adjustment, we should see bonds start to rally November 3rd.