The unprecedented amount of cash the Federal Reserve has pumped into the financial system is proving more powerful for money-market rates than Chair Janet Yellen’s signals she will start turning off the spigot.
Use of the Federal Reserve’s reverse repurchase agreement facility is surging as speculation rises that policy makers may make the program a permanent tool to be used during the unwinding of unprecedented monetary stimulus.
Treasuries fell, pushing yields on 10-year notes higher by the most since November, along with counterparts from developed nations, as signs the crisis in Ukraine is easing reduced demand for haven assets.
The record drop in U.S. government securities held in custody at the Federal Reserve is fueling speculation that Russia may have shifted its holdings out of the U.S. as Western nations threaten sanctions.
Deutsche Bank AG was one of the few firms surveyed by Bloomberg in January to correctly predict the worst rout in the U.S. Treasury market since 2009. Now, Germany’s largest lender says it’s time to buy.