Wednesday’s Federal Reserve policy decision maintained interest rates at the same level since July 2023, which did not surprise investors. However, the announcement of a significant reduction in the quantitative tightening (QT) program starting in June caught the attention of savvy traders. QT involves the selling off of assets by the Fed to decrease money supply and increase interest rates.
Following the news, US Treasury yields experienced a decline, with both the 10-year and 2-year yields dropping by 0.05 percentage points. The Fed's decision to curtail its QT program marks a shift from its previous strategy.
