Re-Rebalancing

Published on December 1, 2025 by Premium

The biggest market impact of the Fed's balance sheet normalization may not be in the Treasury market, but in the corporate bond market. The QE programs shrank the privately available supply of safe assets and successfully pushed investors into riskier investments. The historical anomaly of the policy was not in its Treasury holdings, but in owning around 20% of the entire Agency MBS market. Many traditional Agency MBS investors responded by shifting towards higher yielding […]

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