Money Printer Goes BRRR... (The Fed's Surprise Move)

Well... what's $20 billion between friends?

Good morning:

On May 5, 2025, the Federal Reserve conducted its largest single-day Treasury purchase since 2021, buying more than $20 billion in 3-year Treasury notes during a $58 billion auction.

While this was a massive purchase, the Fed framed it as part of normal reinvestment of maturing securities, specifically about $47.2 billion of similar notes rolling off its balance sheet.

Technically, this isn't considered a return to quantitative easing (QE) because the Fed's total balance sheet didn't expand, and there's no official declaration of a new asset purchase program.

But… it is a QE-like concept… that aims to achieve QE-like outcomes.

That’s what matters.

This comes after the Fed recently decided to dramatically slow its quantitative tightening (QT) pace, reducing the monthly cap on Treasury runoffs from $25 billion to just $5 billion - signaling they're no longer in aggressive tightening mode.

The scale and concentrated nature of this purchase are significant.

Unlike previous QE operat…