Rates Spark: Chair Powell Takes The Crosswinds In His Stride

2025-03-20 09:15:00 ET

Summary

• Chair Powell's comfort on inflation and tariffs was notable - he was remarkably relaxed on it.
• That's why the 2yr yield gapped below 4% and the 10yr yield got down to 4.25%, a marked bullish steepening net reaction.
• The QT wind-down is an issue too, as that means the Fed is now a solid net buyer.

By Padhraic Garvey, CFA and Benjamin Schroeder

The Fed becomes a bigger net buyer of Treasuries from April

We had targeted an end of quantitative tightening (QT) by mid-year. The Fed has just snuck in a slowing from April, as a step. It comes against a backdrop where the Fed sees some evidence of liquidity tightening. They are being super-cautious here, as they don't went to repeat 2019 when they overdid it with QT, resulting in some quite severe liquidity shortage issues to deal with....

Read the full article on Seeking Alpha

For further details see: