With the end of QE2 approaching, it is notable that in the first quarter the Fed absorbed all of the net issuance of Treasury debt and then some. Nevertheless, we still believe it is the stock of outstanding debt that matters more rather than the flow of net issuance. Consequently, just as the end of QE1 proved to be benign, we don't anticipate that the conclusion of QE2 will drive yields higher. Indeed, we anticipate that the 10-year Treasury yield will end this year at only 2.5%.
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