Bitcoin News and Finance
QE Begins to Slow — Federal Reserve Reveals Winding Down of Corporate Bond Purchases Skip to main content

QE Begins to Slow — Federal Reserve Reveals Winding Down of Corporate Bond Purchases

QE Begins to Slow — Federal Reserve Reveals Winding Down Corporate Bond Purchases

On Wednesday, the U.S. Federal Reserve announced it would be winding down its corporate bond purchases and selling part of its portfolio. The central bank plans to start with exchange-traded funds and then move on to bonds as the Fed insists “sales will be gradual and orderly.”

Federal Reserve Starts to Unwind QE

All eyes have been on the American central bank in recent times as the Federal Reserve has started tapering back quantitative easing (QE) tactics. It’s fascinating to onlookers because an estimated 24%-30% of all the USD ever created was added to the M1 monetary system by the central bank in 2020 and 2021. Moreover, the Fed told the press at the recent Federal Open Market Committee (FOMC) meetings that it would take some time for tapering discussions to begin.

QE Begins to Slow — Federal Reserve Reveals Winding Down of Corporate Bond Purchases
Fed Chair Jerome Powell hasn’t discussed the recent slow down toward QE since he said the Fed wasn’t even ready to have a conversation concerning tapering back QE.

The central bank followed up with these statements by removing liquidity from the market via reverse repos. As soon as the unwinding started, the Fed’s reverse repos increased, moving hundreds of billions of dollars off the market. Now the Fed plans to unwind corporate bond purchases and it explained it will start with exchange-traded funds. The Fed will follow with bond sales, so the sales will not impact the market in a negative fashion.

“Sales will be gradual and orderly, and will aim to minimize the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange-traded funds and corporate bonds,” the central bank noted on Wednesday.

Fed’s Portfolio Sale Announcement Does Not Mention Mortgage-Backed Securities

The announcement was made by the Secondary Market Corporate Credit Facility (SMCCF) which handles emergency bond actions for the Fed. A number of other emergency monetary easing facilities have expired after they were created to handle the economic crisis sparked by Covid-19.

The U.S. central bank did not mention mortgage-backed securities (MBS) and has not mentioned any tapering of MBS purchases to date. Data suggests during the last year that the Fed’s MBS operations and a new flock of Wall Street investors are behind the inflated U.S. real estate market.

The SMCCF also noted the facility will leverage Treasury equity at 10 to 1 when acquiring corporate bonds of issuers, and 7 to 1 when acquiring corporate bonds of issuers that are rated below investment grade. There will be higher grades of risk the SMCCF announcement details, and the sales will become effective on July 28.

What do you think about the Fed winding down corporate bond purchases? Let us know what you think about this subject in the comments section below.

Labels:

Comments

Post a Comment

Popular posts from this blog

Custodial Lightning Network Service Attack Discovered by LN ‘Newbie’ — Hacker Strikes 6 LN Custodians

On September 18, a Redditor posted to the r/bitcoin forum and explained how he discovered a way to “attack [the] lightning Network’s custodial services.” The Reddit account dubbed “Reckless Satoshi” wanted to figure out if a “discrepancy between real routing fees and service’s transaction fee can be exploited for a profit.” The researcher disclosed that he wanted to see how large the damage could be and said “it is bad.” 6 Lightning Network Custodial Services Attacked, Researcher Discloses Findings to Offenders Prior to Public Disclosure A Redditor called Reckless Satoshi published a disclosure post on r/bitcoin this past Saturday and disclosed how he had found a vulnerability with routing fees and some of the Lightning Network’s custodial services. The research attack was done in good faith and after it was complete he disclosed the bugs to the offending services before publishing his findings. Reckless Satoshi used the Lightning Network (LN) attack on six different services incl...
Post a Comment
Read more

Axie Infinity Down 40% Since Last Week’s Price High, Protocol Revenue Outshines Competitors

Last week, the game token leveraged within the Axie Infinity gaming universe skyrocketed to all-time highs, while other crypto markets remained extremely lackluster. During the last seven days, Axie Infinity’s platform token has dropped significantly in value shedding more than 12%. Meanwhile, the game platform’s smooth love potion token has slid over 8% over the last 24 hours. Axie Infinity Down More Than 40% Since All-Time High Not too long ago, the axie infinity (AXS) token was a topical conversation because it reached an all-time high on July 15. At the time, AXS managed to capture $28.93 per unit and since then it has shed 12.8% during the last seven days. The axie infinity (AXS) token is used within the blockchain-based game that involves battles between token-based creatures called “Axies.” AXS is used for the game’s governance system as well as other actions within the game. At the time of writing axie infinity (AXS) is exchanging hands for $16.70 per coin. AXS/USD on Ju...
Post a Comment
Read more

Play-to-Earn Game From Polker (PKR) Exchange Listing – Endorsed by Akon

The Play-to-Earn NFT based Polker.Game ‘s native token $PKR has been officially listed on the popular centralized exchange BitMart. Polker.game has been in the spotlight recently as Akon, the American R&B superstar and record producer gave his official endorsement of polker stating that the “game is revolutionary” and that Polker is “hands down.. the best play to earn, NFT game in the space.”. With the BitMart listing and celebrity endorsement from Akon, Polker is perfectly positioned to become a major player in the Play-to-Earn league. Watch Akon’s Video Here What is Play-to-Earn? Although not a new concept, play-to-earn has become a trending term due to the popularity of the NFT game AXIE infinity. In the past, previous play-to-earn games have also achieved success – however, thanks to the huge amount of development in the blockchain space in recent years the gaming experience is now massively improved. Play-to-Earn games are essentially free to play and open to anyone and...
Post a Comment
Read more

China to Crack Down on Copyright Infringement Through NFTs

Authorities in China are going after creators of digital collectibles based on other people’s works of art, the use of which was not authorized. The government offensive is part of a campaign to combat online copyright infringement and piracy with the participation of several departments. Regulators in China Move to Strengthen Copyright Supervision of Online Platforms The National Copyright Administration of China (NCAC) has recently launched a campaign against copyright infringement and piracy on the internet, together with the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Internet Information Office of the People’s Republic. A major objective of the initiative is to improve copyright supervision of online businesses by investigating cases involving the sale and distribution of infringing products on short video, live broadcast and e-commerce platforms, and promptly dealing with infringing content, the agency announced in a press r...
Post a Comment
Read more
Blogarama - Blog Directory