During the week ended September 28th, the Fed reduced its Treasury security holdings by approximately $2.1 billion and reduced its Government Agency security holdings by approximately $16.7 billion. Recall the Fed stated that it would reduce its Treasury holdings by up to $60 billion and reduce its Government Agency holdings by up to $35 billion during the month of September.
The 2-Year Treasury yield stands at 4.16% while the 10-Year Treasury stands at 3.76%. We expect yields to climb higher for the remainder of this calendar year into 2023. The Fed’s cautious approach to QT indicates that the Central Bank is concerned about causing yields to spike sharply.
Click HERE for our Excel file which details the Fed’s System Open Market Account (SOMA) holdings.