The US Department of Finance has now poured out $ 20 billion in a major repurchase operation from Treasury in a period of two weeks.
The purchase of June 3 and June 10 from the treasury, which are historically in size, enable the agency to buy back effects that mature between May and July of this year.
The relocation has caused speculation on social media that there is now a stealth-quantitative relaxation operation, whereby the Treasury simulates the money printing tactics of the Federal Reserve to stimulate the economy.
Skeptics claim that by purchasing illiquid bonds with borrowed funds, the treasury sends the bond market subtly to maintain confidence in an overloaded system.
But Jim Bianco from Bianco Research says that the movements of the Treasury are a form of calm QE are far from the goal.
“Everyone calls Treasury -Terugkoop” Stealth Qe. “They understand wrong.
The treasury cannot “print”. The treasury lends new more liquid “on-the-run” bonds and uses the yield to reduce old illiquid “off-the-run” bonds.
Koopbacks do not create “money”, previously they improve the overall quality of the bond market.
Back purchase support the bond market because they make the lake liquid, so that it reduces the (lack of) liquidity premium. But those are just a few basic points. “
Treasury Secretary Scott Bessent recently recommended the ‘large toolkit’ of the agency to support the bond market if necessary, and mentioned back purchase as a strategic option to improve liquidity and to stabilize the conditions.
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