Economist: Fed's balance sheet expansion to purchase short-term debt may only affect the front end of the yield curve

Odaily Planet Daily reports that AllianceBernstein’s Chief U.S. Economist Eric Winograd stated in a report that the Federal Reserve’s decision to begin expanding its balance sheet to ensure the banking system has “ample” reserves and to resume purchasing short-term government bonds should only impact the very short end of the U.S. Treasury yield curve and will not affect the longer-term segments. He pointed out that the Fed will restore normal Treasury bill purchases, initially aiming to buy about $40 billion worth of T-bills per month. “This decision’s impact on the market should be limited to the money market and the front end of the yield curve,” he added. Although the expansion itself is not surprising, some market participants originally expected the Fed might delay this operation until January of next year. (Jin10)