Re:A decade after the crisis, The Fed plans to shrink its bo...
by ac29 on Monday September 18, 2017 @11:31PM
(#15281590)
>1) Futures on US treasury bonds are going to fall, as the DOT unloads 42 million of them. This is a lot, and it will affect the value of your investments/401k in a non-trivial way.
I think its important to note that the Fed is not going to start selling their holdings, they are going to stop reinvesting the proceeds as much (they haven't bought any additional assets since 2014, reinvestment aside). This should have a much more muted effect on the market -- letting a ~1%/month of bond assets mature without reinvestment is not the same as selling 1%/month.
>4) Foreign interests will have a "fire sale" of US debt available to them for purchase.
Again, the Fed isn't selling anything. They are partially curtailing demand by reducing reinvestment which will likely affect bond prices and yields, but not nearly as dramatically as selling them pre-term.
I think its important to note that the Fed is not going to start selling their holdings, they are going to stop reinvesting the proceeds as much (they haven't bought any additional assets since 2014, reinvestment aside). This should have a much more muted effect on the market -- letting a ~1%/month of bond assets mature without reinvestment is not the same as selling 1%/month.
>4) Foreign interests will have a "fire sale" of US debt available to them for purchase.
Again, the Fed isn't selling anything. They are partially curtailing demand by reducing reinvestment which will likely affect bond prices and yields, but not nearly as dramatically as selling them pre-term.