THE DAILY CHART: America's false Japanese security

If the world's eyes weren't understandably fixed on the efforts of a small group of Japanese technicians trying to prevent a nuclear disaster, the Fed's Open Market Committee meeting would have got some more attention. The Fed, which made no mention of the situation in Japan in its statement, decided unanimously to complete its purchases of US bonds – dubbed QE2 – but also issued a more robust assessment of the US economy which effectively rules out QE3. And while the Fed maintained that they would keep interest rates "exceptionally low" for an "extended period", the more positive language about the American jobs market in particular is being interpreted by some as the first steps towards preparing the market for interest rate hikes, although that's still a fair way off.

Predictably, the crisis in Japan has seen a swarm of scared investors buying US bonds, but Salon's Andrew Leonard has rebuffed some onlookers for interpreting the bond market support as an endorsement of further US borrowing. "The world is not telling the US to borrow more... We're fooling ourselves if we take the flight to Treasuries as some kind of enthusiastic endorsement of the US fiscal management. Fear, not confidence, is the watchword this week." Indeed, as Robert Gottliebsen argues, the rising yen is the result of Japanese companies bringing their international investments, which are largely tied up in the US, back home; Japan is the second largest provider of low cost debt to America. The largest is China, which is also trying to pull back from US bonds. Longer term, Japan's retreat means higher interest rates for the US and a more difficult recovery.