Treasury Is Trying To Force QE By Dumping T-Bills

It's Yellen Vs Powell, And Yellen's Gonna Win Big

Summary

• The Treasury is issuing more short-term bills than usual, reducing the issuance of long-term notes and bonds to negative on net for 2023.

• This strategy is seen as an attempt by Yellen to counteract Quantitative Tightening (QT) and force the Fed to stop QT and go to QE.

• Yellen is draining the Reverse Repurchase Agreement (RRP) to push the Fed back into QE before issuing more notes.

• If she were to issue them now, the Treasury would lock in paying high rates on its debt for the long term.

• They can't afford that.

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