European ABS purchases pushed yield curve lower: Fed paper

The surge in capital inflows from emerging market economies and European acquisitions of asset-backed securities contributed to the downward pressures on US interest rates in the build-up to the financial crisis, a Federal Reserve paper, published on Thursday, says.

Carol Bertaut, Laurie Pounder DeMarco, Steve Kamin and Ralph Tryon, the paper's authors, use a combination of empirical estimation and model simulations to measure the effects sizable purchases by European investors of asset-backed