{"id":202818,"date":"2021-03-15T21:23:00","date_gmt":"2021-03-15T18:23:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/heres-what-the-fed-can-do-to-keep-bond-rates-from-rising-says-analysts\/"},"modified":"2021-03-15T21:23:00","modified_gmt":"2021-03-15T18:23:00","slug":"heres-what-the-fed-can-do-to-keep-bond-rates-from-rising-says-analysts","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/heres-what-the-fed-can-do-to-keep-bond-rates-from-rising-says-analysts\/","title":{"rendered":"#\n  Here\u2019s what the Fed can do to keep bond rates from rising, says analysts"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3e777b3dbb4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3e777b3dbb4\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/heres-what-the-fed-can-do-to-keep-bond-rates-from-rising-says-analysts\/#Others_say_the_importance_of_regulatory_relief_is_overblown\" >Others say the importance of regulatory relief is overblown<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/heres-what-the-fed-can-do-to-keep-bond-rates-from-rising-says-analysts\/#Sunny_Oh\" >Sunny Oh<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Here\u2019s what the Fed can do to keep bond rates from rising, says analysts<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Others_say_the_importance_of_regulatory_relief_is_overblown\"><\/span>\n  Others say the importance of regulatory relief is overblown<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000199277\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Calls are heating up for the Federal Reserve to extend relief on bank capital requirements to help prevent the government bond market from coming under siege.<\/p>\n<p> Though few expect big shakes out of this week\u2019s Fed meeting, investors have begun to increase their calls for the central bank to extend the relief measures it introduced last April at the onset of the pandemic regarding banks capital requirements before a looming March 31 deadline.<\/p>\n<div class=\"paywall\">\n       During the early days of the pandemic, regulators allowed banks that act as brokers, or middlemen, in the roughly <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.sifma.org\/resources\/research\/fixed-income-chart\/\" class=\"icon none\">$20 trillion Treasurys market<\/a> to exempt U.S. government bonds from being treated as assets in calculations of the so-called Supplementary Leverage Ratio (SLR). It was one of many measures financial watchdogs deployed in recent years to prevent Wall Street from seizing up and to encourage banks to maintain the flow of credit to households and businesses.<\/p>\n<p><strong>See<\/strong>: Markets set up for dis<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ointment from Fed meeting as bond yields renew rise<\/p>\n<p>\u201cIf the SLR is not extended, the concern is we\u2019ll see financial institutions dump a chunk of their U.S. Treasury exposure, which would see yields spike and send short-term shock waves through markets,\u201d wrote Chris Weston, head of research at Pepperstone.<\/p>\n<p>Under the current leverage rules, banks must have capital equal to at least 3 percent of their assets, with that share rising as high as 5% for large banks, the so-called systematically important financial institutions. <\/p>\n<p>According to some market participants, the exemption would encourage banks to increase their holdings of Treasurys at a time when investors have grown increasingly concerned about the U.S. government bond market\u2019s ability to handle periods of sharp volatility. More pertinently, it could help cap long-term bond yields that have risen to their highest levels in a year.<\/p>\n<p>The 10-year Treasury note yield<br \/>\n        TMUBMUSD10Y,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.000%\" channel=\"\" class=\"\">1.612%<\/bg-quote><br \/>\n       is down 3.3 basis points to 1.602%, after finishing on Friday at the highest level since Feb. 2020. Bond prices move inversely to yields. <\/p>\n<p>It\u2019s unclear whether the Fed will use this week\u2019s meeting of its rate-setting committee as the occasion to announce an extension of its capital relief measures, as the central bank has plenty of time before the March 31 deadline, when the exemption lapses. Still, the meeting could hold clues to the Fed\u2019s stance on the issue.<\/p>\n<p><strong>Read<\/strong>: Fed to stay dovish this week as Powell channels his inner Gary Cooper calm<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>\u201cThe Fed has punted on the\u00a0SLR\u00a0extension question so far, but again, we will be looking at the press conference \u2013 to see if Powell is pushed on this and what his attitude is,\u201d said John Velis, FX and macro strategist for BNY Mellon, in a Monday note.<\/p>\n<p>At the same time, Fed Chairman Jerome Powell likely faces political pressure in terms of not cutting banks any more slack. Democrat senators<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/44792b80-c331-44e3-b02c-41a151f4cb6c\" class=\"icon none\"> Elizabeth Warren and Sherrod Brown<\/a> have said an extension of the SLR exemption would amount to a \u201cgrave error,\u201d representing a rollback of the regulatory regime that has strengthened the robustness of bank balance sheets, after several major storied institutions collapse at the onset of the 2008 financial crisis, while a string of others required bailouts.<\/p>\n<p>Already, there are some signs that banks may be anticipating that further regulatory relief will not arrive.<\/p>\n<p>The most recent data on the holdings of primary broker-dealers at banks, which trade directly with the Fed and U.S. Treasury, showed a record weekly decline in their U.S. government bondholdings to $185.8 billion.<\/p>\n<p>Yet, despite the hubbub over the SLR rules, there also have been plenty of skeptics about whether an extension of the capital relief would be as meaningful to the bond market, as some had made it out to be. <\/p>\n<p>Mark Cabana, head of U.S. rates strategy at BofA Global Research, dubbed the issue a \u201cred herring.\u201d<\/p>\n<p>He noted that many market participants may be giving too much weight to the SLR rules as an im<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>te driver of Treasurys trading. But he did see one place where phasing out the relief could potentially hamper the bond market down the road. <\/p>\n<p>Without relief, banks may lack the capacity to resolve moments of indigestion in the Treasurys market, which has cropped up somewhat of an issue as investors shed government debt throughout this year.<\/p>\n<p>\u201cFor most investors, this is potentially a cause of market indigestion, not a major risk to positioning,\u201d said Lauren Goodwin, economist and portfolio strategist for New York Life Investments, in an interview. <\/p>\n<p><strong>Read<\/strong>: Here\u2019s what one hedge fund trader says happened in Thursday\u2019s bond-market tantrum, which sent the 10-year Treasury yield to 1.60%<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Sunny Oh\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Sunny_Oh\"><\/span>Sunny Oh<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B21005575-02D4-D4B5-4572-D30A6DFACA1A%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Here\u2019s what the Fed can do to keep bond rates from rising, says analysts &#8221; Others say the importance of regulatory relief is overblown Calls are heating up for the Federal Reserve to extend relief on bank capital requirements to help prevent the government bond market from coming under siege. Though few expect big&#8230;<\/p>\n","protected":false},"author":1,"featured_media":194632,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-202818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/202818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=202818"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/202818\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/194632"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=202818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=202818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=202818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}