Market Analysis

While the press had been floating the idea that the Fed would announce its entry as a buyer into the US Treasury market, many analysts had been discounting that probability.  The Federal Reserve did announce today that it would be buying $300 billion of US Treasurys and, more importantly, that it would be ramping up its program to purchase Fannie Mae and Freddie Mac mortgage-backed securities by a whopping $750 billion to a total of up to $1.25 Trillion this year ($500 billion had aleady been committed).  Also the Federal Reserve indicated it would buy another $100 billion more of Fannie Mae and Freddie Mac debt bring the total debt purchases from Fannie and Freddie to $200 billion.

Both the stock market and bonds markets are responding favorably to this announcement.