The Fed is purchasing $85 billion of Treasuries and mortgage-backed securities a month, a policy known as quantitative easing, or QE. Bernanke and his colleagues on the Federal Open Market Committee have pledged to continue buying bonds until the labor market improves “substantially.” Unemployment was 7.9 percent in January.
“There has been a lot ink spilled on this, but it’s worth remembering that even if the Fed stops QE at the end of this year, that’s still $1 trillion worth of balance-sheet growth,” said Michael Cloherty, head of U.S. interest rate strategist at Royal Bank of Canada’s RBC Capital Markets unit in New York, on Bloomberg Radio’s “Surveillance” with Tom Keene, Sara Eisen and Michael McKee. “It’s not exactly going easily into the night.”
The central bank bought $3.3 billion Treasuries maturing from May 2020 to February 2023.
Treasury 10-year yields will fall to 1.85 percent by the end of March and then climb to 2.30 percent by Dec. 31, based on a Bloomberg survey of financial companies with the most recent projections given the heaviest weightings.