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. In analyzing the economic and financial market impacts of the QE announcements, what are...

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Accounting

. In analyzing the economic and financial market impacts of the QE announcements, what are the probable reasons for the changes in behavior of:

  • long-term and short-term rates,
  • credit default swaps, and
  • inflation expectations.

Hint: This question is asking for reasons, not a summary of the changes in the Tables. For example, 10 year Treasury yields declined 107 basis points in QE1. Why?image

Table 1: Changes in Yields (in Basis Points) on Select Securities QE1 QE2 5-year Treasuries -74 10-year Treasuries -107 Agency MBS (10-year duration) Baa Corporate Yield Credit Default Swap -40 10-year TIPS -187 -107 -81 & The credit default swap yield in this table corresponds to an index of Baa corporates

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