Source: Wall Street Journal
“Markets have cheered the Federal Reserve’s imminent announcement that it will stop shrinking its asset portfolio later this year, but determining that date is just one challenge facing central-bank officials….Specifically, they need to decide the right combination of Treasurys of varying duration to hold – whether mostly short-term bills or a mix that also includes more longer-term notes and bonds….Fed Chairman Jerome Powell has signaled the central bank is prepared to announce Wednesday, after its two-day policy meeting, when it will end the runoff of its $4 trillion portfolio later this year….Before the 2008 crisis, the average maturity of the Fed’s Treasury holdings was less than four years. Now, it’s around nine years. The average maturity of all Treasury debt outstanding is nearly six years….Officials aren’t eager to discuss the possibility of selling mortgage bonds because they don’t want to do anything to disturb an already fragile housing market.”
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