Sep
18
Wall Street’s Bond Gurus Have the Fed’s Balance-Sheet Unwind All Wrong
By-
During periods of central-bank purchases, Treasury yields rose
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Fed likely to announce start of balance-sheet runoff this week
On Wall Street, the conventional wisdom is that once the Federal Reserve finally starts to whittle down its crisis-era debt investments, U.S. Treasury yields will have nowhere to go but up.
But to some bond investors, history suggests the consensus couldn’t be more wrong.
During each of the Fed’s quantitative-easing cycles, yields rose when the central bank was buying and then fell after it stopped. That ran counter to what many expected based on simple supply and demand as the Fed amassed $4.5 trillion of debt and became the single biggest holder of Treasuries…
Wall Street’s Bond Gurus Have the Fed’s Balance-Sheet Unwind All Wrong
