Today the Fed announced that they've purchased another $3B worth of US Treasuries. These were all bonds with 2010 and 2011 maturity dates. One of the ways that Bernanke can Break the Buck is by buying Treasuries. After the Fed's announcement, the US Dollar rolled over and is currently trading down on the day down at $85.14.
Not surprisingly, as the buck breaks down, US Equities are testing the short selling community here right at the breakout line. The SP500's breakout TREND line remains 822, while the USD's breakdown TREND line remains 84.87.
In yesterday's Q2 Macro TREND conference call I walked through the theme of The Queen Mary Turning (cost of capital breaking out to the upside). While the likes of Timmy Geithner doesn't get this, I am certain that Heli-Ben does. Now that he has cut rates to zero, the only way Bernanke can stop the upward inertia in the chart below (10-yr yields), is to buy Treasury Bonds.
(chart courtesy of stockcharts.com)