Author: Liu Jiaolian

The Fed Slowing QT reads: "For the principal payment of Treasury bonds held by the Federal Reserve that matures in March, if the principal payment of Treasury bonds held by the Federal Reserve that matures in March, if the principal payment of Treasury bonds held by the Federal Reserve that matures in each month, if the principal payment of Treasury bonds held by the Federal Reserve that expires in each month, if the maximum limit of $5 billion per month, it will be extended at the auction. Redeem Treasury bond coupon securities until the monthly limit is reached. If the principal payment of the coupon is lower than the maximum limit, the national bond notes will be redeemed."

Translation of the Fed's verbal statement into plain words: In the past, it used to sell USD 25 billion worth of USD treasury to the market every month, that is, net recycle USD 25 billion liquidity from the USD treasury market. Now, this selling pressure is directly reduced to USD 5 billion, which means that it will reduce USD 20 billion liquidity to be reduced.

Pumping is smaller, and it is much smaller, and it is three-quarters smaller.

The effect is immediate. The yield on U.S. Treasury fell, breaking through the 4.3 mark and falling from 4.32 to around 4.23.

The Federal Reserve reduces the net selling pressure on US bonds, which reduces the suppression of US bond rises. When US bonds rise, yields will naturally fall.

Although the Federal Reserve will not start implementing this until April 1. But when the market hears the signal, it will inevitably start to act in advance.

In this way, the Federal Reserve achieved this, on the one hand, the benchmark interest rate remained unchanged, and on the other hand, the U.S. Treasury yield fell.

Jiulian has already written in the article "Interest Rate Cut Trap" yesterday 2025.3.19. The US Federal, which urgently needs debt refinancing this year, is more concerned about whether the yield on US bonds can be reduced.

Powell gave the answer.

The Federal Reserve finally ate this bowl of raw rice.

But, Powell's rice is for eating, not for the risk speculation market.

Interest rate has not dropped, and the leverage ratio has continued to be suppressed. MBS sell-off has not dropped, so it continues to pump water. Support for liquidity in the risk market is carefully controlled to the lowest level.

On the other side, the president continued to post and encourage: The Fed should better lower interest rates!

The game continues...