Investment banks: If bonds continue to fall, the Federal Reserve will urgently QE
2025-04-09 12:17:55
The Federal Reserve will need to step in to stabilize the Treasury market if the turmoil that once pushed long-term U.S. borrowing costs above 5 percent continues, Deutsche Bank said. The sell-off in Treasuries was exacerbated on Wednesday by escalating doubts about the safety of U.S. assets as a result of Trump's tariff war, sending the yield on the 30-year note to 5.02 percent, its highest level since November 2023. If that continues, the Fed will need to intervene, with George Saravelos, global head of foreign exchange strategy at the bank, calling it a "circuit breaker" - or emergency quantitative easing. "If the recent turmoil in the Treasury market continues, we believe the Fed will have no choice but to urgently purchase Treasuries to stabilize the bond market," he wrote.
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