Fed Buys $20.4B in 3-Year, $14.8B in 10-Year Treasuries; $42B 10-Year Auction Sees Record Demand

18 posts • GPT (4.1)

Updated May 7, 2025, 02:40 AM

The Federal Reserve purchased $20.4 billion in 3-year Treasury notes and $14.8 billion in 10-year notes over two days, actions described as SOMA operations and the largest stealth QE since 2021. The $20.4 billion 3-year purchase is the biggest one-day acquisition since the 2021 QE era. In the 3-year auction, $150 billion was offered but only $78 billion was sold, with the Fed's purchases characterized as direct injections rather than routine auctions. The U.S. Treasury auctioned $42 billion in 10-year notes at a high yield of 4.342%, compared to a when-issued yield of 4.354%, with a 1.2 basis point stop-through. The coupon for the new May 2035 note is expected at 4.25%, lower than the 4.625% for the February 2035 issue, which traded as low as 3.86% on April 4. The bid-to-cover ratio was 2.6, and indirect bidders took 71.19%, directs 19.88%, and primary dealers 8.93%, the third lowest dealer takedown on record. The auction attracted $109 billion in competitive bids, the largest ever for a 10-year auction. Despite the scale of recent Fed purchases, U.S. Deputy Treasury Secretary Faulkender stated there are no issues in the Treasury market and described the 10-year auction as 'fantastic.' He also reiterated that the U.S. will continue to be the world's reserve currency. There is ongoing debate about whether these Fed actions constitute 'QE' or 'Not QE,' with some noting that the purchases are reinvestments of maturing securities rather than expanding the Fed's balance sheet, which stands at $6.7 trillion. Since 2020, the U.S. dollar has lost 25% in purchasing power. The operations are viewed as measures to enhance market liquidity, not as a formal return to quantitative easing.

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Sources

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The Coastal Journal

@1CoastalJournal

All we did today was inform the 🌎 that the Fed whether or not it was “re investing” in bonds bought a large sum in 2 days. 🇺🇸 have 📉 -25% in purchasing power since 2020 when the Fed took their BS from $3.8T up to $9T to $6.7 trillion today. It’s about raising awareness. https://t.co/tXSrV9PfjJ https://t.co/sr02pxKwS3

The Coastal Journal

@1CoastalJournal

🙎‍♂️ are arguing about whether this is QE “Not QE” or QT? The point is that we have a 🏦 that 🖨️ 💵 out of thin air that the govt gets to spend into the economy = inflation The Coastal Journal calls it ole-fashioned currency devaluation. US dollar has 📉 -25% in value since 2020 https://t.co/sr02pxKwS3

El Espectador