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But if they are buying their bonds to prop up the price of... selling bonds? that seems like it wouldn't really accomplish anything, as they would probably just
by saurik 4y ago
But if they are buying their bonds to prop up the price of... selling bonds? that seems like it wouldn't really accomplish anything, as they would probably just be losing money on the spread of those two simultaneous actions.
- refurb 4y agoMy understanding (from how the fed does it) is the buying of bonds influences the rest of the lending market since sovereign bonds are the “risk free benchmark”. They don’t care about the bonds the Lu are buying, they care about the market price it sets.
- abm53 4y agoThe government are not buying bonds to prop up the price. The Bank of England are (and the distinction is very important to that market).
- colinmhayes 4y agoTreasury bonds set the lower limit for interest rates in the currency. Why would anyone write a 30 year mortgage at 3% when they can buy a bond backed by the government for 5%? The central bank wants people to be able to get loans so they prop up the price of the bond.