The Fed's Mandatory and the Debate on Treasuries

The Fed created a lot of coupons and treasuries at very low rates. What do you do with those now? Who wants those bonds? They're off the run. The Fed owns two thirds of low coupon treasuries and mortgages that were issued during that period. So they're going to have to keep them. That's what it comes down to. For investors, you have a significant loss and either you sit with it, you keep it. Or you can take the loss and try and buy a higher coupon asset,. But there's a trade off there that you have to assess very carefully.

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