March 11 (Bloomberg) -- Treasuries fell as the Federal Reserve said it will accept agency and private mortgage debt as collateral to relieve the credit crisis.
The central bank will hold auctions to lend as much as $200 billion in Treasury securities and increase swap lines with two foreign central banks.
The two-year yield climbed 17 basis points, or 0.17 percentage point, to 1.66 percent at 8:33 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of 2 percent security due February 2010 dropped 10/32, or $3.13 per $1,000 face amount, to 100 21/32.
Bloomberg
March 11 (Bloomberg) -- The Federal Reserve plans to lend up to $200 billion of Treasury securities in exchange for debt including private mortgage-backed securities that have slumped in value as homeowners defaulted on their payments.
The Fed set up a new tool,
the Term Securities Lending Facility, to lend Treasuries to primary dealers for 28-day periods, through weekly auctions. The Fed also said in a statement in Washington that
it's increasing the amount of dollars available to European central banks through swap lines. Today's steps are the latest in Chairman Ben S. Bernanke's effort to alleviate increasing strains in financial markets that are curtailing credit available to homeowners and companies.
The Fed last week said it will make up to $200 billion available to banks through other tools to help boost liquidity. The auctions of Treasuries, which will begin March 27, may be secured by collateral including agency and private
residential mortgage-backed securities, the Fed said. The central bank "will consult with primary dealers on technical design features'' of
the new tool.BloombergMore financial alchemy? Seems like a sweet deal, wonder if I can get CW to give me dealer status so I can sell the Feds my debt as collateral?
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