November 4th, 2010
08:46 PM ET

Bond traders jump in ahead of government buys

Stocks stage big rally, Dow spikes 2 percent 
U.S. stocks rallied Thursday, with all three major indexes finishing at two-year highs, as investors continued to cheer the Federal Reserve's announcement to pump $600 billion into the economy.

The Dow Jones industrial average jumped 220 points, or 2 percent. The S&P 500 climbed 23 points, or 1.9 percent, and the Nasdaq rose 37 points, or 1.5 percent.

The Fed said Wednesday it will buy $600 billion of U.S. Treasuries by the middle of next year. The additional stimulus, referred to as quantitative easing, is the Fed's latest stab at lowering interest rates and combating deflation - a move it hopes will help prop the sluggish economy.

The announcement was met with a tepid response Wednesday, but markets around the world surged Thursday. Commodities went along for the ride, with oil jumping 2 percent and gold rallying 3 percent. Treasuries also rose as investors looked to get in on the buying action ahead of the Fed.

Bond traders jump in ahead of government buys 
Treasury prices continued to rise Thursday, after the Fed's launch of a $600 billion bond-buying spree and a weak labor report boosted the appeal of government debt.

Anticipation of a second round of asset purchases from the Fed has lent support to the bond market recently, as traders have tried to get ahead of the government's big buy.

Now, after the Fed laid out its plan Wednesday, buyers who were previously sitting on the fence, are jumping in to buy bonds and front-run the government's purchases, said Michael Cheah, a bond fund manager at SunAmerica.

Bond traders are trying to get ahead of the Fed's $600 billion in purchases, by getting into the market at current prices and yields. The large bond purchases by the government are meant to drive Treasury prices higher and yields lower.

- reporters Blake Ellis and Annalyn Censky contributed to this report.

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Filed under: Economy
soundoff (11 Responses)
  1. Jwrtr68

    but the conservatives & "Tea baggers," I mean "Party" don't comment on this now do they?! Oh wait, I forgot that they haven't concocted aplausible enough lie yet....What was I thinking!

    November 4, 2010 at 9:33 pm | Report abuse |
  2. Gilbert

    Jwrtr68, what a dumb handle. Did you think of it alone, or did a donkey help you come up with it?

    November 4, 2010 at 9:40 pm | Report abuse |
  3. Jim Brieske

    This won't work. The lowering factors will not improve fast enough to keep the fall at mid range.
    This stock market will crash. There is nothing to build. Bush built houses. He had to because Bill and Hillary Clinton sent most of our factories to China.
    When George W. Bush took over the White House he soon learned many of the big corporation stock numbers on Wall Street were false. They were much much lower. This trickled down to the smaller companies in our stock market. The fact is a small percentage of our stock market numbers were real.
    Bill and Hillary Clinton had maintained a good economy by maintaining a fraudelant stock market as they shipped all our factories to China.
    Then we were attacked on 9/11.

    November 4, 2010 at 10:45 pm | Report abuse |
  4. Ace

    Lol i dnt get it but i no that bush is one reason we n this big hole of debt n this billion dollar war so he didnt do anything good at all n if he did then u cant say it wasnt good enough to over look his failure as a president

    November 5, 2010 at 3:54 am | Report abuse |
  5. osama bin diesel

    It is time for the Amero

    November 5, 2010 at 10:32 am | Report abuse |
  6. teaPARTYdemocrat

    We are in this deficit because we spent $1,000,000,000 (trillion) to get Saddams head.

    November 5, 2010 at 11:31 am | Report abuse |
  7. teaPARTYdemocrat

    What is Osamas head worth?

    November 5, 2010 at 11:32 am | Report abuse |
  8. SOS

    Why keep pointing blame on political party(s) for sending jobs out of OUR country; face the facts we all want cheap (inexpensive) products

    November 5, 2010 at 11:41 am | Report abuse |
  9. SOS

    If it was not for the walmarts many of us would not have many things

    November 5, 2010 at 11:49 am | Report abuse |
  10. Jim Brieske

    Ace. Please use the correct english when addressing my comments. Millions and millions of people have sacrificed their lives for it. Did you know that? Also this is not an arena which a hurried limited number of characters is used.
    Finally please read some non fiction books about former presidents.
    SOS. I want American made goods. I am aware how local economies function. If money is kept within the community and not sent to China then Americans do not end up borrowing our own money.
    It stupid and careless to allow a country that eats rice and is five times your size to manufacture most everything you have. Economics 101 states, for a country to survive it must produce the goods it consumes. Selling their excess to other countries.

    November 5, 2010 at 12:28 pm | Report abuse |
  11. JustAskin

    American made products = Jail birds. We already spend thousands more dollars taking care of prisoners then we do children in schools, so why not make them do something? Every day, each inmate is to do so many hours of producing products to be sold back to our people. cheap labor on our own soil. duuuh.

    and i have a question..
    bush's wars made us broke.. but yet, obama has spent more so far.. now were pumping 600 billion unbacked dollars into the economy when the value of our currency is close to flat lining as it is.. and now were going to pay for obama to go to india at a price of 100 to 200 million a day?!
    How is this for the better of OUR country.. our elections only pick OUR president, not world frigen leaders, right?

    And just my two cents.. he loses the majority of the house, and this 600 billion is going to have prices soaring.. is this a VITAL trip were wasting tons of money on or is this just so he can run and not be a scape goat or have to deal with the blame?

    sorry if you people reading this think im stupid or something. im 17 and we are learning about the great depression in school.. and from the way my teacher describes it and how it started.. im having a slight little twinge of deja vu.

    November 6, 2010 at 12:07 am | Report abuse |