Nothing Special With Treasuries as Fed Has Mortgages

Bond traders are finding there is nothing special about Treasuries anymore, now that the Fed accepts substitutes for government securities as collateral -- having concluded it wasn't enough to reduce the benchmark interest rate for overnight bank loans six times since September.

Securities that can be borrowed at interest rates close to the Fed's target rate are called general collateral. Notes and bonds that are in the highest demand are called ``special'' by traders because rates on loans secured by these securities are lower than the general collateral rate.