Treasurys up before Fed buyback, minutes

Published on Market Watch, by Deborah Levine, May 20, 2009.

NEW YORK (MarketWatch) — Treasury prices posted slight gains early Wednesday before the Federal Reserve’s next purchase of U.S. debt and the central bank policy makers reveal more about their outlook for the economy and bond purchasing program.

“We look to generally bond-friend spins” in the Fed minutes, said strategists at RBS Securities …

… The Fed’s Open Market Committee will also release an update to its forecasts for economic growth, employment and inflation.

“The FOMC will almost certainly have a gloomier overall outlook than it did in the last official forecasts in January,” said analysts at Wrightson ICAP.

Gains may be limited as investors are increasingly assured that the financial system will survive, after Bank of America said it raised $13.47 billion by selling equity. See more on Bank of America.

Also, Treasury Secretary Timothy Geithner told lawmakers the financial system has started to heal and the government’s plan, called the Public-Private Investment program, to remove toxic assets from financial institutions will be operational in the next six weeks. (full text).

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