Fed Not Setting Rates in Credit Markets: Sources - Economy * US * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Fashion Show.
Smartphone Guide
Here's a need-to-know guide to nine devices, based on features, price, network and platform.
Wines for the Holidays
Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES

How Much Do You Know About Green?
Green has become part of our everyday lives. Green is everywhere-- energy, clothing, food, housing, transportation. It's a big business and a global business.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?
The Many Myths of Coca-Cola
Can you tell which statements are true, and which ones are just rumors?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

Fed Not Setting Rates in Credit Markets: Sources

By: Steve Liesman, senior economics reporter, CNBC | 29 May 2009 | 06:29 AM ET

Text Size

The recent surge in interest and mortgage rates is not down to the Federal Reserve’s purchases of Treasury and mortgage assets, sources familiar with the thinking of Fed officials told CNBC.

The $1.2 trillion in mortgage assets and $200 billion in Treasurys bought by the Fed in an attempt to backstop the troubled credit market were not designed to impact rates, the sources said.

Yields on 10-year U.S. government bonds jumped more than 50 basis points in the last two weeks, which unnerved many investors.

Fed officials are studying reasons for the rise in rates and are suggesting that the increases are partly due to economic improvement, convexity hedging, declining deflation concerns as well as overall demand, according to the sources.