In today's Fed policy statement, what people are most concerned about"release water"The question, that is, about the purchase of government bonds and MBS, the Fed said, "the Fed willAt least at the current rate.Increase holdings of treasury bonds and institutional housing and commercial mortgage-backed securities to maintain the smooth operation of the market. " This seems to leave us an open answer.

You should know that the amount of bond purchases of the Fed's quantitative easing operation fell from 80 billion / day at the beginning of the "unlimited QE" to 4 billion / day last week, and the span of the market is unpredictable.So what exactly is the so-called "current speed"? How much more water does the Fed have to release?

After that, we were inNew York Federal ReserveAn operational policy report seems to see the answer:

The department plans to continue to increase SOMA holdings at the current rateUs treasury bondsEquivalent to about 80 billion dollars a month

The department plans to continue to increase its holdings at the current rateInstitutional Mortgage-backed Securities (MBS)It's about 40 billion dollars a month.

Don't stop printing money from the Federal Reserve!

To put it simply, although it is not very clear, one can expectThe current purchase of Treasuries of about $4 billion a day / $20 billion a week will continue, almost at the same pace as last week.

It also means that, other things being equal, the Fed, at its current rate,Monetize slightly less than $1 trillion of government bonds a year.

According to "The QE reduction of the Federal Reserve is not enough to offset the fear of "helicopter dropping money" in issuing bonds.According to the analysis, if the US Treasury strictly adheres to its previous top plan, it will have to invest another 700 billion US dollars into the market before the end of this quarter, that is, in less than three weeks. Considering that large-scale treasury bonds will be issued in the second half of the year.The Fed's current pace of bond purchases is likely to be lower than the market expected.

The New York Fed also said, "from mid-June to mid-July, we will continue to buy government bonds on a monthly basis and will continue to operate a range of maturity and securities types of government bonds." The department will continue to roll over principal payments on maturing US Treasuries held by all SOMA (systematic Open Market accounts) during the auction. "

In addition, for mortgage-backed securities (MBS), the New York Fed said, "from mid-June to mid-July began to buy institutions MBS on a monthly basis. Total purchases this month are expected to be about $96 billion, including $56 billion of agency bonds held by SOMA and principal payments from agency MBS to be reinvested. Institutional MBS purchases will continue to focus on the upcoming public offering of the 30-year and 15-year fixed-rate agency MBS. "

That is to say,The purchase scale of MBS has not decreased, and the printing of money is still going on.!

The statement addedIn the future, the schedule of POMO will no longer be released every Friday, but once a month.:

The department will announce the monthly number of planned purchases of Treasuries and institutional MBS on or around the 9th working day of each month, and the arrangements for temporary purchases on or around the 9th and 19th working days. The first month purchase period will begin on June 12, 2020 and last until July 13, 2020.

That is to say,The longer gap between the announcement of the plan also gives the Fed more flexibility in its open market operations.. This may be a response to the previous situation. "The scale of the Fed's bond purchases is "shrinking again and again". Even the daily POMO is abnormal.As mentioned in the daily POMO (normal Open Market Operations), bond purchases unexpectedly did not meet the previously predetermined bond purchase plan, and the market began to doubt whether the Fed was in a hurry to exit. In addition, the department will continue to buy the agency CMBS at the current rate, with operations of about $250 million to $500 million a week, including SOMA holdings's reinvestment in the principal payment of the agency CMBS.

Finally, the New York Fed said that in accordance with the instructions of the Federal Open Market Committee, the Fed was prepared to expand the scale of its purchases and adjust its composition to maintain the smooth operation of the Treasury, institutional MBS and institutional CMBS markets.

In short, without considering "negative interest rates" and "yield curve control", although the Fed's bond purchase quota has been reduced again and again, it does not consider the exit problem, but continues to strengthen asset purchases to increase liquidity. This is almost understandableThe full commitment that the Fed is prepared to take to monetize the fiscal deficit. (Sina US stock Lin Ke)