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By Andrew Gogerty | 08-26-2009 03:07 AM

When the Stimulus Ends

WHG Income's Mark Freeman on what happens to government debt, Treasuries, and agencies when the Fed's asset-purchase program ends and possible sales begin.

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WHGIX Westwood Income Opportunity Instl

Andrew Gogerty: Hi, this is Andrew Gogerty, Senior Analyst with Morningstar and joining me today is Mark Freeman, Manager of the WHG Income Opportunity Fund.

Mark, thank you for joining me today and taking time.

Mark Freeman: My pleasure.

Gogerty: Let's just start with the stimulus because obviously it is on everyone's mind. Obama just announced Bernanke was going to get a second term, and you know the stimulus had a lot to do with that. I am a curious to what you think about, at some point the stimulus package is going to end, they are going to start rolling it back, what's going to happen to government debt, Treasuries and agencies? What do you see happening there going forward?

Freeman: Yeah, that's a great question and I think in many ways we don't know the answer to that, but I do think that we know that we are going to be in a very interesting environment going forward, so I think specifically to the Fed, in terms of the role that they have played up to this point and specifically being active in the secondary market and purchasing assets.

So I think you have to look at it almost in two parts. The first part is you have to say, well what happens when they stop purchasing those assets and it seems that roughly October or by the end of this year depending on which program, we are fairly close to that and so we are going to see how does the market adjust to that taking place.

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