The Global Macro Monitor blog was started b an independent trader and economist and, in a prior life, was a global macro hedge fund PM/trader, headed emerging market bond trading desks on Wall Street, and an economist/global strategist, beginning his career at the World Bank in the mid 1980’s. His unique and unconventional views are reflected on his website at marcromon.wordpress.com.

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Here’s an interesting chart we threw together showing the Fed’s ownership of Treasury securities maturing in each year on the curve.  There are no bonds maturing in 2032-35 due to the temporary discontinuance of the 30-year earlier in the millennium, which some believe contributed to the housing bubble.

The Fed owns a high of 35 percent of the $60 BN of bonds maturing in 2011,  and only 4.4 percent of $142 BN of 2040 bonds.  It doesn’t take a MOTU to recognize the potential for massive POMO generated short squeezes on the long-end of the curve, which we have seen and, will not doubt, continue see during this age of quantitative easing.

It will be also interesting to juxtapose the same chart in six months hence when QE2 is under full sail.   Stay tuned!

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Posted on December 14, 2010 by macromon

Category: Think Tank

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2 Responses to “Fed Ownership of the U.S Treasury Curve”

  1. briant57 says:

    Do you think the FED has been holding off on the Long end % ownership as a last bullet to control the rising interest rates and there effect on the housing market.

    That is to say one day they are able to adjust long term rates by bringing the 30Y fed holdings to a % in line with rest of curve?

  2. Porsche87 says:

    Unless I’m reading the chart wrong, I believe you meant the Fed owns 35% of the bonds maturing in 2021, not 2011.