Another not-so-small purchase by the Fed
There are 9.5 weeks left before the end of October, when the Fed plans to end its $300 billion Treasury purchase program. As I wrote last week, the Fed is running low on ammo if it plans to make its money stretch all the way into October.
Today, they announced another not-so-small purchase of Treasuries, $6.1 billion to be precise. That brings the total purchased to $268.5 billion, leaving $31.5 billion left to spend over the next 9.5 weeks.
Since the start of the program in March the Fed has averaged $12.2 billion of Treasury purchases per week. They have enough ammo left to average $3.3 billion per week through the end of October.
What’s for certain is there won’t be any more weeks like August 5th-11th, when the Fed swallowed $23.5 billion worth of Treasuries.
As the Fed winds down its participation in Treasury markets, will investors step in to soak up the flood of supply? If they don’t, interest rates could head higher, choking off the “recovery.”