Recently the Fed reiterated that their $300 billion program of buying long-dated Treasury Bonds would end on schedule, meaning as soon as it hit $300 billion. Well, that’s been achieved, so according to recent Fed statements, the program is over.
This is a critical development, because the ability of the US government to continue to fund its massive deficits (at favorable rates) requires that each Treasury Auction be “well bid.” The Fed has been a major participant, and so we might reasonably wonder who will fill the Fed’s shoes.
This is critical, because the US government continues to float weekly auctions of Treasuries in quantities that just a few short years ago would have been unthinkable.
Exhibit A: Next week’s schedule:
Read More »