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The Fed balance sheet has come down about 1/2 a trillion $ since QT started, to approx $8.4T. However, the vast majority of this is coming from its Treasury holdings, which mature at fixed dates. It still has over $2T of Mortgage-Backed Securities, which mature much more slowly, especially when people aren't refinancing out of existing mortgages.
The Fed's target is to reduce its MBS holdings by $35B a month, but it's been doing less than half of that because there aren't enough reaching maturity. But with all the aggressive rate hikes already in place, wouldn't it make sense to bring the MBS reduction closer to target by selling some of them outright, rather than waiting for the securities to mature?
they dont have the guts. remember they stuck their toe in the water a few years ago and quickly retreated. imo they will hold most of them to maturity or bury them in primary dealers
Maybe because they don't want to lose a ton of money. With interest rates higher, the value of that debt should be lower. Why not wait and sell after interest rates come back down when you can get a better price?
they dont have the guts. remember they stuck their toe in the water a few years ago and quickly retreated. imo they will hold most of them to maturity or bury them in primary dealers
Would you say that they have poor gut health which is causing these problems?
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