Live Updates > Live Update Details
2025-10-28 19:55:24
[Multiple positive factors converge in the US Treasury market, with the Fed's balance sheet reduction ending and triggering a wave of bond buying] ⑴ US Treasury market trading volume remains sluggish, with the 10-year yield fluctuating narrowly below the key 4% level, reflecting that the market has fully priced in the multiple positive factors of the Fed's rate cuts, the end of its balance sheet reduction, and the easing of trade tensions. ⑵ The Fed's upcoming balance sheet restructuring plan will be a key variable – to maintain a balance sheet balance of $6.5 trillion, hundreds of billions of dollars in annual reinvestment will be concentrated in medium- and long-term bonds, significantly narrowing term premiums. ⑶ The current pace of balance sheet reduction is $35 billion in MBS and $5 billion in Treasury bonds per month. After the policy shift, all principal payments from mortgage-backed securities maturing will be invested in Treasury bonds, directly strengthening demand for 7-10 year maturities. ⑷ Focus on housing data and consumer confidence surveys during the day. Technically, the 10-year yield may fluctuate between 3.96% and 3.99%. The issuance of new 7-year bonds will test the market's ability to absorb demand.
