You are here
Bloomberg discovers that the Fed controls the Treasury bond market
A report similar to this one could be written about the gold market, whose rigging is part of the same policy as the rigging of the Treasury bond market -- the control of currency values and interest rates, a rigging just as obvious these days but not yet mentionable in polite company.
* * *
One Trader Calls All the Shots in the Treasury Bond Market
By Liz McCormick and Ye Xie
Bloomberg News
Tuesday, November 2, 2021
At 10:10 a.m. most work days on Wall Street, officials at the Federal Reserve wade into the Treasury bond market. For the next 20 minutes, they proceed to snap up bonds of all shapes and sizes. They're impervious to price moves, and they never sell. An indiscriminate bond-buying machine, they've now amassed a $5.5 trillion stockpile of the debt.
This is a staggering sum, equal to more than 10 times the amount the Fed owned before the Great Recession and quadruple the amount held by any other investor. All of this buying comes in the name of injecting money into the economy and driving down interest rates to ward off collapse, first in 2009 and again after the pandemic hit. Which is a reasonable and noble endeavor—central bankers all over the world have pursued similar policies—but in the process, the Fed has come to dominate the bond market to such a degree that no other voice seems to matter nowadays.
... Dispatch continues below ...
... ADVERTISEMENT ...
Buy, Sell, or Store Precious Metals with Money Metals Exchange
Money Metals Exchange, a national bullion dealer recently named "Best Overall" by Investopedia.com --
https://www.moneymetals.com/
-- is a great low-cost source for precious metals coins, rounds, and bars. Money Metals also pays handsomely when you wish to sell your precious metals.
Shop online with Money Metals Exchange here --
https://www.moneymetals.com/buy
-- or by calling 1-800-800-1865.
Meanwhile, Money Metals Depository will store your precious metals in a segregated account at low cost:
https://www.moneymetals.com/depository
At less than 1.6%, the yield on the 10-year Treasury bond, a key benchmark for borrowing costs across the globe, is detached from reality. The U.S. economy is growing at a clip of almost 6% this year, inflation is running above 5%, and the Biden administration posted a budget deficit of more than 13% of gross domestic product. The only bigger deficit recorded in the past seven decades was the one the Trump administration delivered last year.
The bond traders of yesteryear would never have accepted such a paltry return in this kind of environment. In the 1980s, as the U.S. was coming out of a prolonged bout of unusually high inflation, they earned the moniker “bond vigilantes” for the way they'd react to any sign of incipient inflation by selling bonds and driving up interest rates. Tom Wolfe ironically dubbed them Masters of the Universe in "The Bonfire of the Vanities," while Michael Lewis turned them into cult heroes in "Liar's Poker."
The vigilantes caused a stir in Washington a few years later when they dumped bonds at such a frenetic pace—triggering a huge surge in government borrowing costs—that they bullied the Clinton administration into overhauling its budget plans. The episode so shocked the president's political adviser, James Carville, that he famously quipped at the time that he wanted to be reincarnated as the bond market, because “you can intimidate everybody.”
That moment turned out to be the high point of the vigilantes' power. Slowly and steadily, they've lost influence to the point that today they find themselves “outgunned by the bond pacifists” at the Fed, says Jared Gross, head of institutional portfolio strategy at JPMorgan Asset Management.
This creates a risk for the economy. The bond market, for all its imperfections, acted as an important check on government fiscal and monetary excesses. That power now rests almost exclusively with Fed Chair Jay Powell—the man who, along with his fellow board members, tells the Fed's traders how many bonds to purchase each day. ...
... For the remainder of the report:
* * *
Toast to a free gold market
with great GATA-label wine
Wine carrying the label of the Gold Anti-Trust Action Committee, cases of which were awarded to three lucky donors in GATA's recent fundraising campaign, are now available for purchase by the case from Fay J Winery LLC in Texarkana, Texas. Each case has 12 bottles and the cost is $240, which includes shipping via Federal Express.
Here's what the bottles look like:
http://www.gata.org/files/GATA-4-wine-bottles.jpg
Buyers can compose their case by choosing as many as four varietals from the list here:
http://www.gata.org/files/FayJWineryVarietals.jpg
GATA will receive a commission on each case of GATA-label wine sold. So if you like wine and buy it anyway, why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals?
To order a case of GATA-label wine, please e-mail Fay J Winery at bagman1236@aol.com.
* * *
Support GATA by purchasing
Stuart Englert's "Rigged"
"Rigged" is a concise explanation of government's currency market rigging policy and extensively credits GATA's work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon --
-- or for an additional $3 and a penny buy an autographed copy from Englert himself by contacting him at srenglert@comcast.net.
* * *
Help keep GATA going:
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:
To contribute to GATA, please visit:
