US Fed to Purchase $80 Billion in Treasuries, $40 Billion in MBS Per Month

The Federal Reserve is planning to continue its quantitative easing measures as a means of steering the US economy away from further collapse. Although the Fed did not announce specific targets and quotas on asset purchases, it did mention that its plan is to continue increasing Treasury and commercial mortgage-backed securities (MBS) holdings at the current pace as a means of continuing the market’s smooth functioning.

In the meantime, the New York Fed stated in its operating policy that the Desk will continue increasing the Treasury securities and agency mortgage-backed securities in its system open market account (SOMA) at the ongoing pace of roughly $80 billion and $40 billion each month, respectively. The purchases translate to an approximate run rate of $4 billion per day, or $20 billion per week.

The New York Fed also stated that the Treasury purchases will be made each month commencing from mid-June to mid-July, and will cover an assortment of securities and maturities. Likewise, purchases of agency MBS will also begin over the same time period, with concentrating purchases on recently produced coupons that have fixed rates of 15 and 30 years. The Desk will also keep purchasing agency CMBS each week at a pace between $250 million and $500 million.

In addition, the Desk will also be making adjustments to the release dates of its permanent open market operation (POMO) updates. Updates on purchases pertaining to Treasury and agency MBS will be released once a month on the ninth business day, and purchase operations will be released twice a month on the ninth and nineteenth.

Information for this briefing was found via the New York Federal Reserve. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.