The Fed Takes A Fancy To Long Term Debt

Several weeks ago, BUSINESS WEEK pointed out that the Treasury was likely to reduce its issuance of longer-term debt in favor of shorter maturities. If successful, this strategy would tend to put downward pressure on long-term interest rates and thus both reduce the federal deficit and stimulate capital investment by business and home purchases by the public. Since then, Laura D. Tyson, incoming head of the Council of Economic Advisers, has confirmed that such a move was under consideration, and the markets have responded by pushing long rates lower.

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