I heard the Anchor Bots on CNBC today bemoaning the weak showing at the latest Treasury auction. The yield went up much more than planned. If the world economy is picking up, then the flight to safety US Gov bonds briefly enjoyed may be ending. In which case, the due bill for Obama’s spending binge will come much sooner than anticipated. I also got a chuckle when one of the Bots mentioned that the Fed might buy treasuries to keep the yield down. Sheesh.
That's the whole Quantum Easing thing. The Fed announced this spring that it would step up open market purchases to assure the US Treasury that it could sell all of the bonds it needed to fund the $4 trillion in deficit spending. In effect, the Fed is manipulating the interest rate market by artificially suppressing the long term rates by creating bogus demand for these bonds. Without Fed purchases, the interest rates would be significantly higher now than they currently are today. Seems like market manipulation to me, as this is mostly done in secret. Someone should wake up the SEC Enforcement Division!