5 ms·
T bond yields are determined by auction, so the Fed does not have full discretion over long term interest rates. That's why the 30yr yield has fluctuated betwee
by henron 5y ago
T bond yields are determined by auction, so the Fed does not have full discretion over long term interest rates. That's why the 30yr yield has fluctuated between 1.6-2.5% this year even though the overnight rate has not changed.
- nostrademons 5y agoThe Fed is a participant in that auction with a large ($80B/month) budget and a target interest rate of 0-0.25%, though. You don't have much of an incentive to bid low if you know the Fed is going to swoop in and buy the bonds anyway.
- panarky 5y agoThrough July, $11.5 trillion of new Treasury securities have been issued. The Fed buying $80B/month is less than 5% of what was issued. Source: https://www.sifma.org/resources/research/us-treasury-securities-statistics/ https://www.sifma.org/resources/research/us-treasury-securit...