How to keep the next 'dash for cash' from crashing bond market

A new analysis suggests that the Federal Reserve should be prepared for unlimited bond purchases in order to prevent the U.S. Treasury market from seizing up during future crises, as it did at the beginning of the COVID-19 pandemic.

reuters.com

Relevant topic timeline:

8/21/2023

Treasury Yields Hit Highest Since 2007 on Elevated Rate Fears

US bond-market selloff continues as resilient economy prompts investors to anticipate elevated interest rates even after the Federal Reserve finishes its hikes, leading to a 16-year high in 10-year yields and increased inflation expectations.

9/5/2023

Fed’s Debt Runoff Is ‘Painless’ at $1 Trillion Mark, With Bigger Test Ahead

The Federal Reserve has sold about $1 trillion of its bond holdings without causing strains in financial markets, as part of its balance sheet reduction program.

9/5/2023

Post-Labor Day corporate debt spree revives U.S. Treasury selloff

A surge in bond issuance by U.S. investment-grade-rated companies is putting pressure on long-end U.S. Treasuries as investors opt for higher-yielding corporate debt over government bonds.

9/9/2023

New Inflation Data Could Show Need for More Fed Rate Hikes

Bond traders are anticipating that the Federal Reserve will continue with interest-rate hikes, and next week's consumer-price index report will provide further insight on how much more tightening may be required to control inflation.

9/21/2023

Fed's Interest Rate Outlook Clouds Forecast for Stocks and Bonds

The Federal Reserve's plans for prolonged elevated interest rates may continue to put pressure on stocks and bonds, although some investors doubt that the central bank will follow through with its projections.

9/22/2023

Treasury Yields at 17-Year High as Investors Brace for Prolonged Period of Higher Rates

Despite the recent increase in bond yields, investors are advised to continue buying Treasury yields as they are expected to rise further in the coming months.

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Posted 8/25/2023, 4:05:00 PM

How to keep the next 'dash for cash' from crashing bond market

reuters.com

Relevant topic timeline:

8/21/2023

Treasury Yields Hit Highest Since 2007 on Elevated Rate Fears

9/5/2023

Fed’s Debt Runoff Is ‘Painless’ at $1 Trillion Mark, With Bigger Test Ahead

The Federal Reserve has sold about $1 trillion of its bond holdings without causing strains in financial markets, as part of its balance sheet reduction program.

9/5/2023

Post-Labor Day corporate debt spree revives U.S. Treasury selloff

A surge in bond issuance by U.S. investment-grade-rated companies is putting pressure on long-end U.S. Treasuries as investors opt for higher-yielding corporate debt over government bonds.

9/9/2023

New Inflation Data Could Show Need for More Fed Rate Hikes

9/21/2023

Fed's Interest Rate Outlook Clouds Forecast for Stocks and Bonds

9/22/2023

Treasury Yields at 17-Year High as Investors Brace for Prolonged Period of Higher Rates

Despite the recent increase in bond yields, investors are advised to continue buying Treasury yields as they are expected to rise further in the coming months.