The Federal Reserve is “quietly” expanding its balance sheet. This isn’t a restart of quantitative easing; it’s because the market has insufficient buyers, forcing it to step in personally to support the Treasury bond market.

1️⃣ Treasury holdings hit a new intra-year high
Based on the latest data, the Fed’s total holdings of Treasury bonds have risen to $4.4 trillion, the highest level since July 2024. Total assets have correspondingly expanded further to $6.7 trillion, also reaching a new high since May 2025.
2️⃣ Long-end rates are fragile, and the market lacks buyers
Since December 2025, the Fed has cumulatively purchased $237 billion in Treasury bonds, bringing its Treasury holdings as a share of total assets to 65.9%, the highest since March 2008. During a normal balance sheet reduction, Treasury holdings should continue to decline—but they are climbing against the trend instead. This suggests that Treasury market liquidity may be facing problems: with a lack of buyers, the central bank is forced to step in personally to maintain order. At the same time, the 30-year U.S. Treasury yield has briefly broken through the 5% psychological level.
3️⃣ Rate-cut hopes are nearing zero
Current interest rate futures show that the market’s expectation for rate cuts this year is only about 8%, down from 20% a month ago. While the Federal Reserve keeps interest rates high, it injects liquidity into the market—monetary policy is entering an unprecedentedly contradictory zone.
#美联储 #美债 #货币政策 #Balance sheet expansion