WEEKLY FINANCIAL REVIEW: Fed, Treasury Moves Increase Risk Appetite
Better mood at Wall Street driving money into commodities.
Bryce Knorr
Published: Mar 24, 2009
The Federal Reserve and Treasury Department are supposed to keep an arm's length distance, but the twin towers of the U.S. financial system moved in tandem over the last week, scoring a one-two punch in a dramatic bid to halt the nation's economic slide.
The Fed shot first, announcing it would buy up to $300 billion in longer-term Treasury debt, an action designed to lower mortgage rates. While the move was not completely unexpected, it was the type of bold statement the market has been looking for as the crisis seemed to drag on and on. The central bank also pledged to buy loans for consumers and small businesses backed and issued by U.S. government agencies, in another action designed to pump money into the financial system.
The Treasury finished the tag-team slapdown of stock market bears on Tuesday by announcing details of its effort to buy toxic debt, one of the causes for the banking system's woes. That kicked off another stock rally market that extended gains after new home sales came in better than expected.
Much of the attention following these actions focused on the stock market. That's not an unimportant concern for farmers, because a better mood on Wall Street appears to be driving more money into commodities as investors seem willing to take more risk.
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