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Investing in long-term government bonds and mortgage-backed securities hurt the bank as interest rates rose and bond prices plummeted.
The Fed uses its buying power in the bond market to raise or lower interest rates by manipulating how much money is available in the economy.
Selling the Treasury and mortgage-back bonds on its balance sheet helps the central bank raise interest rates.
The market that sets the rate for the 10-year T-Note is betting that growth will continue and inflation won’t last.
Those bonds have helped keep lots of money flowing into the economy. But now, the Fed is signaling that its going to taper off its monthly purchases.
After this week’s global market crash, the credit market is showing signs of stress.
But that may not be signaling that the economic damage from the coronavirus will be as bad as the Great Recession.
Why are investors settling for such small returns? U.S. Treasurys are about the safest place to put your money.
A recent study shows mortgage refinancing spikes before economic recession.
If you want to know what’s going on in this economy, the bond market is a pretty good place to start.