Traders Bet the Fed’s Bond-Buying Binge Has Just Begun
- Door may be open to more action as soon as July meeting
- Strategists envision quantitative easing as growth ebbs
July 15: Fed's Harker Says Rates Shouldn't Move Until Inflation Tops 2%
The Federal Reserve has bought trillions of dollars in Treasuries just to fix the bond market. It may need to buy a lot more to help repair the economy.
A surge of new coronavirus cases is clouding the economic outlook in the U.S., and that’s likely to translate into pressure for more action from the Fed -– maybe as soon as this month’s meeting. Fed Governor Lael Brainard hinted as much on Tuesday, saying the central bank should pivot its policies toward providing longer-run accommodation.
Wall Street strategists and Fed officials say the focus will now be on sustaining a recovery and potentially keeping a lid on long-term yields as the government pumps in even more fiscal stimulus. The Fed has also been compressing yields with emergency lending facilities supporting everything from muncipal to corporate debt. But those programs are temporary.