In analyzing the economic and financial market impacts of the QE announcements, what are the probable reasons for the changes in behavior of:

olong-term and short-term rates,

ocredit default swaps, and

oinflation expectations.

Hint: This question is asking for reasons, not a summary of the changes in the Tables. For example, 10 year Treasury yields declined 107 basis points in QE1. Why?

Table 1: Changes in Yields (in Basis Points) on Select Securities QE1 QE2 5-year Treasuries -74 -17 10-year Treasuries -107 -18 Agency MBS (10-year duration) -107 -12 Baa Corporate Yield -81 -7 Credit Default Swap -40 2 10-year TIPS -187 -25 The credit default swap yield in this table corresponds to an index of Baa corporates. Table 2: Changes in Yields (in Basis Points) on Federal Funds Futures by Maturity QE1 QE2 3rd month -28 0 6th month -27 -1 12th month -33 -4 24th month -40 -11Table 3: Changes in Yields (in Basis Points) on Select Securities QE3 5-year Treasuries -6 10-year Treasuries -3 Agency MBS (10-year duration) -15 Baa Corporate Yield Credit Default Swap 10-year TIPS -11 " The credit default swap yield in this table corresponds to an investment grade index. Table 4: Changes in Yields (in Basis Points) on Federal Funds Futures by Maturity QE3 3rd month 6th month 12th month 24th month 40 0 0