Summary

After 250 weeks without a purchase of Treasuries (since Oct. 2014), for the second week in a row, the Federal Reserve bought Treasuries.

The $14 billion in purchasing is in stark contrast to zero purchases since Quantitative Easing ended and selling during Quantitative Tightening.

When the Fed sells Treasuries, asset prices struggle, but when the Fed buys Treasuries, asset prices have surged.

Chart below shows the Fed’s total Treasury holdings (red line) versus the weekly change in Treasuries (black columns) since 2014. The QE taper is visible with the first dashed yellow line, the Quantitative Tightening the second dashed yellow line, and then the QT taper highlighted by the third dashed yellow line. Now, the Fed seems to have begun a new period of Treasury purchasing…but for how long and for what purpose, only Mr. Powell knows.