The US Fed is really breaking new ground for something that’s never been done before, monetizing capital markets at an unprecedented level. RBS released data today showing that the Fed is monetizing 70% of net bond supply:
The following statement and chart from the RBS’ Drew Brick pretty much explains it all: “QE has seen the Fed extend its dominion on the US curve away from the short-end and into longer duration paper is patent, too. On a rolling six-month average, in fact, the Fed is now responsible for monetizing a record 70% of all net supply measured in 10y equivalents. This represents a reliance on the Fed that is greater than ever before in history!“
