Fed Day Was Sort Of A Let Down

The Fed did not do as expected and failed to up the level of US Treasury purchases above $300 billion. I hope you were watching Bill Gross CNBC so that you could see his reaction when the markets ripped the face off of US Treasury bonds.

Look at how the 30-year Treasury went vertical at 11:16 am today (green arrows)!

There were over $100 billion in new Treasuries issued over the last few days. I am sure that a lot of those buyers expected the Fed to protect prices today, with the commitment of more cash to buy Treasuries.

All of those people are now under water.

There are another $71 billion in Treasuries being issued this week. Unless the Fed steps in in size, Bonds could get annihilated in the next few days as they find a new price at which people will be willing to buy them.

Mortgage applications fell over 18% this week. Just wait to see how bad this number gets if rates go vertical the next few days.