Fed can no longer prop up TLT?

[annieB]

Long bonds appear to be selling off inspite of the latest fed buying plan.
Gold seems to be selling off too.
I would have guessed that both would still be going higher along with equities.
Any thoughts??

[melveyr]

They can prop up anything they want that is for sale in dollars. I think the market just had expectations of a bolder purchasing plan.

[murphy_p_t]

They can prop up anything they want that is for sale in dollars.

In the short term, yes.

The housing market got away from them a few years back, you'll recall.

Thankfully, we no longer hear pols touting the benefits of the "ownership society"...as liar loans are transferred to the taxpayer backstop.

[melveyr]

They can prop up anything they want that is for sale in dollars.

In the short term, yes.

The housing market got away from them a few years back, you'll recall.

Thankfully, we no longer hear pols touting the benefits of the "ownership society"...as liar loans are transferred to the taxpayer backstop.

Sorry. I used terribly imprecise language.

I meant that whatever the Fed actually buys with those dollars can be propped up in dollar terms. The Fed buys up Treasuries every day to pump up their price and they can do that forever because they spend with keystrokes.

The Fed hasn't (as far as I know!) gone out and purchased homes with dollars.

[moda0306]

I think the fed lowering rates was only one modest part of the housing bubble.  Interest rates were very lucrative when housing took off in 2008.  The weren't "artificially low rates" for a few years into the bubble.

I think we need to get over this idea that interest rates are just grossly unnaturally low.  If that we're the case, we'd have rampant inflation.  I'm not really a believer I the "loanable funds model" in it's pre-MR purest form, but what would we expect in a huge deleveraging event?  The current supply vs demand of loanable funds should very well result very, very low interest rates.