NanoViricides Inc. (NNVC)

[JG36]

Me:

After all, while rates have been going up despite the massive bond purchases by the Fed they would be even higher without them.

Puffer:

I don't agree with that view.

This is elementary economics -- prices go up when demand goes up, for any given amount of supply. The supply of bonds is determined by how much the federal government spends, which isn't much affected by what the fed does or doesn't do. The demand for bonds is what the fed and everybody else buys. The fed has been buying a huge fraction of the treasury bonds issued, so that has certainly increased the price of the bonds over what they otherwise would have been. Higher priced bonds are the same as lower yielding bonds. If rates have gone up despite the fed purchases it is because of collapsing demand from other sources. China and other countries have been reducing their bond purchases. If the fed hadn't been buying all those bonds then combined with the lowered demand from other buyers the rates would be higher than they are now.