Treasurys

The crosscurrents of persistently high inflation and the pandemic’s refusal to go away have caused large daily swings in yield, indicative of poor liquidity.

Investors in need of an alternative to certain T-bills are flocking to the Federal Reserve’s facility for reverse repurchase agreements. That’s adding to demand created by T-bill supply cuts.

Federal Reserve Chairman Jerome Powell said the market dislocations of the past year resulting from the pandemic had changed the impact that the supplementary leverage ratio was having on the largest banks. After temporarily easing the requirement, the central bank is considering longer-term reforms.

The 10-year Treasury yield fell below 1.5% for the first time in a month while the rate on the U.S. long bond dropped to a level unseen since early March.

Relying on retained earnings alone, it would be until at least 2036, if not longer, before government control of Fannie Mae and Freddie Mae might end.

After they reopened on Tuesday, Treasury 10-year yields rose four basis points to touch 1.25% — the highest since last March — while the 30-year equivalent pushed above 2%.

The bank started buying more Treasurys and mortgage-backeds over a year ago, long before talk about rate cuts. What did it know that its rivals didn't?