A Hitchhiker's Guide to Federal Reserve Participation in Fixed Income Markets

Nina Boyarchenko and Or Shachar

Journal of Economic Perspectives, 2025, vol. 39, issue 2, 171-94

Abstract: We review US dealer-intermediated fixed income markets, including Treasuries, agency mortgage-backed securities, corporate bonds, and municipal bonds. Through the lenses of primary dealers' positions, we show these markets' evolution over the past decade and the effects of recent episodes of abrupt deterioration in market functioning. We then overview how the Federal Reserve interacts with fixed income markets for the purposes of monetary policy implementation and liquidity interventions. We conclude by discussing the shifting composition of investors in US fixed income markets, and what consequences such changes in the investor base may have for monetary policy transmissions.

JEL-codes: E52 E58 G12 G41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/jep.20241436

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