Federal bonds rates

Bond yields lower after the Federal Reserve keeps rates unchanged
January 23, 2021 – 09:50 am
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The Federal Open Market Committee's statement containing key language that points to starting rolling back the Fed's balance sheet in September.

"The committee expects to begin implementing its balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated, " the post-meeting statement said.

The central bank hopes to begin shrinking its $4.5 trillion portfolio of bonds it has accrued on its balance sheet, largely collected during and after the financial crisis and the Great Recession it generated.

"They look like they're trying to thread the needle between sounding firm and not giving too much away. In that way they were successful, " said Aaron Kohli, fixed income strategist at BMO. "That's provided some solace to rates. The fact they were willing to say they would go relatively soon (on balance sheet reduction) ... It's a fair statement and it's pretty balanced."

On the auction front, the Treasury Department auctioned $34 billion in 5-year notes at a high yield of 1.884 percent. The bid-to-cover ratio, an indicator of demand, was 2.58.

Indirect bidders, which include major central banks, were awarded 69.8 percent. Direct bidders, which includes domestic money managers, bought 6.2 percent.

Also, economists polled by Reuters expected new home sales to hit 620, 000 units in June, versus a reading of 610, 000 in the prior month.

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Source: www.cnbc.com
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