The Fed holds long dated treasuries and will start to wind down its Balance Sheet on June 1st, starting at $30 Billion a month until September 1st when it will sell $60 Billion a month.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504b.htm
Who will the Fed sell these bonds to? Total Treasuries trading (as of April) were $679.1 billion https://www.sifma.org/resources/research/research-quarterly-fixed-income-issuance-and-trading/ but how can we find out their maturities? I would assume these are mostly on the shorter ended side of the curve and that 60 Billion a month additional in LTTs would be substantial?
Assuming no changes in demand, could increased supply push down prices? And would this be a case to short long term treasuries (TMV)? Or is the idea that this is already priced in and the better argument to buy TMV would be a belief that during subsequent meetings the Fed could decide faster QT is warranted and thus even more bond sales?
My main concern is the historically negative correlation between equities and bonds and if the Fed scares markets too much treasuries could rise.
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