CRT survey finds half saw lower rates without QE

* Fed may have been too transparent, one trader said – CRT

* Selling ahead of Fed announcement very nearly impossible

NEW YORK, Nov 18 (BestGrowthStock) – Half of the Treasury market
participants who responded to a survey said they thought
Treasury yields would have been lower had the Federal Reserve
not begun another round of quantitative easing, the bond dealer
that conducted the survey said on Thursday.

Respondents to the survey of roughly 50 Treasury market
participants by CRT Capital Group in Stamford weighed in on the
efficacy of the Fed’s $600 billion Treasury purchase program,
designed to lower rates and stimulate the economy.

Some of the respondents blamed the Fed’s communication
strategy, saying the many dissenting opinions hurt the effort.
A number of regional Federal Reserve bank presidents had
criticized the idea of a new easing program in the weeks
leading up to the Nov. 2-3 Federal Open Market Committee

The Fed announced the program on Nov. 3 following nearly
two months of speculation, during which time Treasury yields
fell as traders bid prices higher. After the Fed announcement,
investors purged Treasury holdings and yields rose nearly 60
basis points, returning to their levels prior to any hint of a
new program.

Half of the respondents to survey said the Fed’s new easing
program was somehow not working.

“One particularly interesting notion was that perhaps QE
was made too transparent into the FOMC meeting and that its
impact might have been stronger had it been more of a
surprise,” wrote David Ader, head of government bond strategy
at CRT, in a note to clients on the survey results.

Of the respondents, 79 percent said they had not sold
Treasuries in advance of the Fed’s announcement. Those who
tried to do so said they had gotten stopped out–with prices
hitting predetermined levels at which they had to reverse their

A majority of the respondents said the sell-off following
the Fed announcement was a result of overpositioning in the
lead-up to the Fed’s November meeting.
(Reporting by Emily Flitter; Editing by Leslie Adler)

CRT survey finds half saw lower rates without QE