Bank of America Corp (NYSE: BAC) analysts believe that yields on ten-year Treasury notes will fall to a record low of less than 2% during the first quarter of 2011 as the US Federal Reserve expands its purchases of U.S. debt.
The Federal Reserve is expected to purchase $500 billion to $750 billion worth of treasury notes during the next six months or so to support the economic in what many are calling a second round of quantitative easing.
Bank of America Merrill Lynch Rate Strategy head Priya Misra said in a research note that “Our economists are looking for the Fed to embark on an expansion in its balance sheet…This should lower the 10-year Treasury rate to below its historic lows.”
The Federal Reserve said on its August 10th meeting that it would likely resume its program to purchase Treasury notes after determining that “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.” The Federal Reservfe has purchased $10.2 billion of U.S. debt since resuming the program on August 17th.
Bank of America Corporation is a bank holding company, and a financial holding company. The Company is a financial institution, serving individual consumers, small and middle market businesses, large corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. Through its banking subsidiaries (the Banks) and various nonbanking subsidiaries throughout the United States and in selected international markets, it provides a range of banking and nonbanking financial services and products through six business segments: Deposits, Global Card Services, Home Loans & Insurance, Global Banking, Global Markets, Global Wealth & Investment Management (GWIM), with the remaining operations recorded in All Other. On January 1, 2009, the Company completed the acquisition of Merrill Lynch.
Shares of Bank of America Corp (NYSE: BAC) traded up 0.62% hitting $13.28 during mid-day trading on Thursday.
