Is the Fed Buying Up All the Treasury Debt?

No, according to the data provided by SIFMA.  The Fed actually holds a relatively small share of total marketable treasury securities:

 

 

The other big holders include foreigners, households, mutual funds, banks, and pensions.  So don’t blame the Fed for the low yields on Treasuries.
This post was originally published at Macro and Other Market Musings and is reproduced here with permission.

3 Responses to "Is the Fed Buying Up All the Treasury Debt?"

  1. guest   October 1, 2012 at 1:15 pm

    so the fed owned more treasuries in 2002 than now, after they've tripled the size of their balance sheet? cue groucho- who are you going to believe, me or your lying eyes?

  2. Win Smith   October 1, 2012 at 2:25 pm

    Actually, the Fed is buying up the debt that matters most.

    For example, the Fed accounted for 95% of new 30-year debt in the first half of this year.

    You are not distinguishing between between short-term and long-term debt. That is like treating 3.2 beer the same as moonshine. A ten-year T-Note could have about a hundred times the market impact of a four-week T-Bill.

    The Fed measures the impact of its open market operations not by face amount but by "ten-year equivalents": See:
    http://libertystreeteconomics.newyorkfed.org/2011

    The Fed's share of the Treasury market, as calculated with its own metric, is growing dramatically:
    http://www.zerohedge.com/news/2012-09-22/fed-now-

    The Fed has already hit the 70% ownership limit on some of the longer debt.

    As for the short-term debt, the Fed supports those securities with its near-zero short term rate policy.

  3. Matt Dubuque   October 1, 2012 at 8:59 pm

    The Fed is making out like a bandit with their massive bond holdings which SOAR in value in DEflation.

    There is NO WAY they will let inflation return. As rational actors, they will favor DEflation, which helps their bond holdings.

    Rocket science to the Americans.