{"id":211328,"date":"2021-03-26T03:28:00","date_gmt":"2021-03-26T00:28:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year\/"},"modified":"2021-03-26T03:28:00","modified_gmt":"2021-03-26T00:28:00","slug":"powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year\/","title":{"rendered":"#\n  Powell says Fed will \u2018gradually\u2019 cut its bond-market footprint \u2014 some think this year"},"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-6a3df91fbf684\" 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-6a3df91fbf684\" 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\/powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year\/#The_hitch_The_coronavirus_may_have_a_different_timeline\" >The hitch? The coronavirus may have a different timeline<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year\/#A_year_of_crisis\" >A year of crisis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year\/#Other_signals_to_follow\" >Other signals to follow<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/powell-says-fed-will-gradually-cut-its-bond-market-footprint-some-think-this-year\/#Joy_Wiltermuth\" >Joy Wiltermuth<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#<br \/>\n  Powell says Fed will \u2018gradually\u2019 cut its bond-market footprint \u2014 some think this year<br \/>\n<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"The_hitch_The_coronavirus_may_have_a_different_timeline\"><\/span>\n  The hitch? The coronavirus may have a different timeline<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-0000211177\">\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>       The Federal Reserve plans to \u201cgradually roll back\u201d its $120 billion-a-month bond purchase, but only once the U.S. economy has more fully healed from the pandemic.<\/p>\n<p> That was Fed Chairman Jerome Powell talking on Thursday morning with NPR\u2019s Steve Inskeep. Rate increases will be considered only \u201cwhen the economy is all but fully recovered,\u201d Powell said.<\/p>\n<div class=\"paywall\">\n       Wall Street quickly began focusing on the \u201cgradually roll back\u201d part of the talk. <\/p>\n<p>The 10-year<br \/>\n        TMUBMUSD10Y,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.000%\" channel=\"\" class=\"\">1.633%<\/bg-quote><br \/>\n       and 30-year<br \/>\n        TMUBMUSD30Y,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.000%\" channel=\"\" class=\"\">2.362%<\/bg-quote><br \/>\n       Treasury yields climbed Thursday for the first time in five sessions. Bond prices and yields move in the opposite direction.<\/p>\n<p>\u201cThe algos don\u2019t sleep, and pay attention to every word,\u201d said Quincy Krosby, chief market strategist at Prudential Financial, while pointing to the brief selloff in shorter-dated Treasurys that followed Powell\u2019s interview.<\/p>\n<p>What Powell also was stressing, Krosby said, is that once the Fed\u2019s goals for inflation and the labor-market recovery have been achieved, the central bank plans to extricate itself from the market. <\/p>\n<p>\u201cThe market is bracing for that,\u201d Krosby said. <\/p>\n<p>But she also expects Powell to first begin upgrading his characterization of the economy before making any policy changes, which would provide a long \u201cglide path to liftoff,\u201d she said.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"A_year_of_crisis\"><\/span>A year of crisis<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>It has been a year since Powell launched the Fed\u2019s full-throttle pandemic response, slashing benchmark interest rates to range of zero to 0.25% and restarting a historic<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.newyorkfed.org\/markets\/programs-archive\/large-scale-asset-purchases\" class=\"icon none\"> fourth round of large-scale asset purchases<\/a>. <\/p>\n<p>The tactic was first adopted by the Fed in the wake of the 2008 financial crisis to help the reeling economy, and involved buying government-backed mortgage bonds and Treasurys. Its balance sheet in the past year increased by more than $3 trillion to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.federalreserve.gov\/monetarypolicy\/bst_recenttrends.htm\" class=\"icon none\">a record $7.7 trillion<\/a>.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>When might the Fed start its rollback? \u201cIf they want to taper by December, it should be on the market\u2019s radar by June,\u201d said Eric Souza, senior portfolio manager at SVB Asset Management in San Francisco.<\/p>\n<p>Souza said ultimately any decisions on when to reduce monthly purchases will hinge on the U.S. COVID-19 vaccination campaign and progress toward reopening the economy. But even if relatively minor hiccups occur once tapering starts, like if mortgage-backed-securities spreads widen or bond yields climb, Souza expects the Fed to benefit from the global hunt for yield among investors, given the current <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-02-25\/junk-bonds-with-low-yields-here-s-why-they-re-hot-quicktake\" class=\"icon none\">$14.3 trillion glut of bonds now priced at negative yields<\/a>.<\/p>\n<p><strong>Related<\/strong>: Fed should \u2018switch\u2019 up its playbook and buy more Treasurys, fewer mortgage bonds, urge analysts<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Other_signals_to_follow\"><\/span>Other signals to follow<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>The Fed\u2019s easy-money policies have been credited with staving off a financial crisis during the pandemic.<\/p>\n<p>But the unwinding of that policy will hinge on the virus and other factors that won\u2019t be easy to pin down to a timeline, said Steven Blitz, chief U.S. economist at TS Lombard.<\/p>\n<p>One the one hand, the tapering bet suggests that COVID-19 will be contained enough this year so that hard-hit services industries will have rehired laid-off workers, Blitz said, adding that is where the bulk of the roughly 9.5 million remaining lost jobs from the pandemic comes from. <\/p>\n<p>\u201cBut if COVID remains a threat and there\u2019s a wave of cases that cause people to pull back, he\u2019s not tapering in December,\u201d he said. \u201cBut we will only know in December if that view is right or wrong.\u201d<\/p>\n<\/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\":\"Joy Wiltermuth\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Joy_Wiltermuth\"><\/span>Joy Wiltermuth<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-D338E99FA3AD%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Powell says Fed will \u2018gradually\u2019 cut its bond-market footprint \u2014 some think this year &#8221; The hitch? The coronavirus may have a different timeline The Federal Reserve plans to \u201cgradually roll back\u201d its $120 billion-a-month bond purchase, but only once the U.S. economy has more fully healed from the pandemic. That was Fed Chairman&#8230;<\/p>\n","protected":false},"author":1,"featured_media":211329,"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-211328","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\/211328","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=211328"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/211328\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/211329"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=211328"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=211328"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=211328"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}