Big Bailout Banks Belly-up to the Bond Buying Bar.

According to Bloomberg, lenders that were bailed out by the Government have been purchasing Treasuries at a rapid pace. Whether the purchases are a return "favor" to the Feds to help keep interest rates low is purely speculation. Add this activity to the $1 trillion of debt the Feds have already pumped into the system (by buying treasuries), sprinkle the additonal $300 billion they plan to purchase over the next six months, and you have interest rates on ten-year treasuries being held artificially low (the ten-year is a benchmark used to set mortgage and commercial loan rates).

Let simmer for about a year with the 2.9 trillion in debt the government still needs to sell and you have a great receipe for inflation and rapidly rising rates. Or maybe not. The direction of rates are notoriously hard to call. But be prepared. This period of relative calm before the storm is a good time to get your ALM position in order.

Fun Fact: Did you know that a Billion in the U.S. is a thousand million, but a billion in Europe is a million million? I wonder if anyone has ever wired the wrong billion overseas. Anyway, it's all a gazillion to me.