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The 140B you cite is mainly the Fed buying bonds from Treasury (indirectly)? Other than the other large buyers/sellers (e.g. other countries), what else materi
by gz5 4y ago
The 140B you cite is mainly the Fed buying bonds from Treasury (indirectly)? Other than the other large buyers/sellers (e.g. other countries), what else materially creates up or down pressure on the rates (I know they are headed back up but they are still on the low side, historically)?
Added (indirectly) to reflect comments below - tks.
- JumpCrisscross 4y ago> 140B you cite is mainly the Fed buying bonds from Treasury? The Fed isn't allowed to buy bonds from the Treasury [1]. The $140bn refers to bonds the Fed is letting mature without reinvesting the proceeds. That leads to fewer dollars chasing Treasuries, which reduces their price, which raises rates. [1] https://www.federalreserve.gov/faqs/money_12851.htm https://www.federalreserve.gov/faqs/money_12851.htm
- nairboon 4y agoThe Treasury auctions the bonds off to the primary dealers. The primary dealers sell the bonds to the Fed. At the end, the Fed has bought boatloads of Treasury bonds, but not from the Treasury!
- egberts1 4y agoThe Fed isn't allowed to buy bonds from the Treasury [1] … directly. You forgot the word “directly”. Feds can buy back in “open-market”.