The Federal Reserve purchased $1.41 billion of Treasury debt Thursday, including $1.14 billion of notes maturing in November 2021. At its latest meeting earlier this month, the Federal Open Market Committee announced plans to start using proceeds from maturing agency bonds and mortgage-backed securities to stave off contraction of the national balance sheet. Other notable Fed purchases today include $92 million in notes maturing February 2038, $63 million maturing in August 2039, and $45 million maturing in November 2027, according to the New York Fed, which handles market operations for the Federal Reserve. The FOMC had said it would focus its purchase operations out on the longer end of the Treasury market; today’s purchases confirm that guidance. Treasury yields were trading relatively flat Thursday, after closing down yesterday. The benchmark 10-year note closed down to 2.54% on Wednesday and was hovering around that figure in afternoon trading today. Also on Wednesday, the Treasury Department sold $36 billion of 5-year notes at the lowest yield ever – 1.374%. The NY Fed said it plans to buy Treasury securities “on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set” by the Federal Open Market Committee. The Fed plans to purchase about $18 billion in Treasuries between last week and the middle of next month, and will be back in the market Wednesday, twice the following week, and again Sept. 13, which is when it will announce plans for additional purchases. Write to Jason Philyaw.
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