Skip to content

U.S. Federal Reserve Secretly Purchases $43.6 Billion in Treasury Bonds in Suspected 'Silent Quantitative Easing' following China's Unexpected Selling of Bonds

U.S. Treasuries Purchase by Federal Reserve Reignites Debate Over Stealthy Quantitative Easing Operation, with a Weekly Investment Amounting to $43.6 Billion.

Fed has acquired $43.6 billion worth of U.S. treasuries within a week, fueling speculation about a...
Fed has acquired $43.6 billion worth of U.S. treasuries within a week, fueling speculation about a covert quantitative easing program.

U.S. Federal Reserve Secretly Purchases $43.6 Billion in Treasury Bonds in Suspected 'Silent Quantitative Easing' following China's Unexpected Selling of Bonds

The Federal Reserve's recent purchase of $43.6 billion in U.S. Treasury bonds within a week has sparked controversy over potential 'stealth quantitative easing.' The controversial move was reportedly made via the System Open Market Account (SOMA) and included a purchase of $8.8 billion in 30-year bonds on May 8th.

Lucas Garcia, in an op-ed for MarketWatch, termed it "monetary policy on tiptoes," fueling allegations that the Fed's quiet market intervention is indeed a form of 'stealth QE.' Nevertheless, the Fed has long maintained that such purchases were routine reinvestments of maturing securities to regulate the money supply and interest rates[1].

The Fed's actions follow a significant Treasury sell-off by China, which sold $18.9 billion in U.S. bonds in March. As a result, China's holdings of U.S. Treasuries currently stand at $765.4 billion, making it the third largest holder behind the UK and Japan[2].

In March 2025, the Fed announced a slowdown in its quantitative tightening (QT) by easing the pace of Treasury runoff from its balance sheet[3]. While some interpret the recent Treasury purchases as a muted form of quantitative easing (QE), others view it merely as less aggressive QT, as the Fed is merely reinvesting maturing bonds to prevent a rapid decline in its balance sheet[3]. Quantitative easing involves purchasing assets to increase liquidity and support economic activity, while QT involves selling assets to reduce liquidity and control inflation[4].

Regardless, the Fed's asset-purchase actions can have significant implications for economic conditions. However, whether these actions constitute a full-fledged QE program remains a matter of interpretation[5].

Relevant Enrichment Data:

  • Quantitative tightening (QT) involves selling assets to reduce liquidity and counter inflation. In contrast, quantitative easing (QE) involves purchasing assets to increase liquidity and support economic activity.

Sources:[1] Charlie Garcia, "Monetary policy on tiptoes is a ticking time bomb," MarketWatch, May 21, 2025.[2] U.S. Department of the Treasury, "Treasury International Capital," accessed May 24, 2025, https://www.treasury.gov/ resource-center/data-chart-center/tic/Pages/index.aspx.[3] Board of Governors of the Federal Reserve System, "Federal Reserve Slows Down Quantitative Tightening, Eases Pace of Treasury Runoff," May 3, 2025.[4] Federal Reserve Bank of St. Louis, "Quantitative Easing," accessed May 24, 2025, https://www.stlouisfed.org/ on-the-economy/topics/quantitative-easing.html.[5] Tara Siegel Bernard and Ben Casselman, "What Is Quantitative Easing? And Does It Work?," The New York Times, April 17, 2016, updated August 5, 2020.

  1. The escalating debates over the Federal Reserve's recent asset purchases raised concerns about potential 'stealth quantitative easing,' with cryptocurrency and altcoin investors keeping a close eye on these decisions as they might affect general-news headlines and investment opportunities.
  2. Lucas Garcia, in an op-ed, criticized the Fed's approach, terming it "monetary policy on tiptoes," advocating for more clarity in their policy-and-legislation regarding the Open Market Account (SOMA) transactions.
  3. Although the Fed maintains that such purchases are routine reinvestments of maturing securities, there are discussions about whether these actions constitute a muted form of quantitative easing or merely an easing of the pace of quantitative tightening (QT).
  4. In the context of broader economic landscape, watching developments in finance and policy-and-legislation surrounding the Federal Reserve's asset purchases can provide valuable insights for those interested in cryptocurrency, altcoins, and traditional finance investment strategies.

Read also:

    Latest