Yield Curve, U.S. Treasury Debt, February 2011

Gary North

Feb. 24, 2011

Look at the interst rates, top (eaelier) to bottom. They rose.

The FED did not buy 30-year T-binds with its QE2 money. That rate stayed the same. The FED bought the other bonds. Rates rose.

Wait a minute! Rates rose? The FED was buying more bonds. This should have bid up their prices, therefore lowering their rates. But the opposite happened in these categories: 2 year, 3 year, 5 year, 7 year. There was not much change, but the change was opposite to what was expected.