Low interest rates and declining home prices helped push existing home sales higher in September, for the second straight month. And for the first time ever, investors are paying the US Treasury for the privilege of buying US bonds---the 5 yr TIPS (Treasury Inflation Protected Securities) auction on Monday drew a yield of -.55%. This tells me investors are expecting the Fed will eventually be able to cause inflation, in a significant way.
Indeed, the markets have priced in at least $500 billion of additional asset purchases by the Fed, however, the bond market also seems tired of just hearing about the potential. The yield on the 10 year note rose to 2.59% Monday, and is currently trading at 2.60%.
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