Nov. 3 (Bloomberg) -- The following is a reformatted version of a New York Fed statement regarding purchases of Treasury Securities by the Federal Open Market Committee.

On November 3, 2010, the Federal Open Market Committee
(FOMC) decided to expand the Federal Reserve's holdings of securities in the System Open Market Account (SOMA) to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. In particular, the FOMC directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to purchase an additional $600 billion of longer term Treasury securities by the end of the second quarter of 2011.

The FOMC also directed the Desk to continue to reinvest principal payments from agency debt and agency mortgage-backed securities into longer-term Treasury securities. Based on current estimates, the Desk expects to reinvest $250 billion to $300 billion over the same period, though the realized amount of reinvestment will depend on the evolution of actual principal payments.

Taken together, the Desk anticipates conducting $850 billion to $900 billion of purchases of longer-term Treasury securities through the end of the second quarter.
This would result in an average purchase pace of roughly $110 billion per month, representing about $75 billion per month associated with additional purchases and roughly $35 billion per month associated with reinvestment purchases.

The Desk plans to distribute these purchases across the following eight maturity sectors based on the approximate weights below:

Nominal Coupon Securities by Maturity Range:
1 ½ to 2 ½ years: 5%
2 ½ to 4 years: 20%
4 to 5 ½ years: 20%
5 ½ to 7 years: 23%
7 to 10 years: 23%
10 to 17 years: 2%
17 to 30 years: 4%
(The on-the-run 7-year note will be considered part of the
5 ½- to 7-year sector, and the on-the-run 10-year note will be considered part of the 7- to 10-year sector.

TIPS 1 ½ to 30 years: 3%
(TIPS weights are based on unadjusted par amounts)

Under this distribution, the Desk anticipates that the assets purchased will have an average duration of between 5 and 6 years. The distribution of purchases could change if market conditions warrant, but such changes would be designed to not significantly alter the average duration of the assets purchased.

David Fuller's view Another $600 billion (sounds almost small relative to all the other debt, doesn't it?) printed by the end of 2Q 2011. A chunk of that liquidity should push the asset prices of various Fullermoney themes even higher.

Note the table immediately above. Only 4% of Bernanke's dosh has been allocated to US government debt of 17 to 30 year duration. Not enough to keep long-dated yields near historic lows, unless one really does believe that the US economy will slip into a deflationary depression, despite all this liquidity. That is certainly not my view.

I will continue to short US 30-year T-Bond futures on rallies, using the Baby Steps sell-high-buy-low trading tactic, probably for the rest of my life. Will the 30-year bond bull market in US debt now be followed by a bear market of similar duration? Quite possibly, give or take a few years. The lesson of financial history is that one extreme trend usually leads to another, in the opposite direction.