Below is a chart showing the Fed’s Treasury holdings within its balance sheet. Almost 50% of the Treasury holdings matures between now and 2020, with 2018 the year with the most maturities.
The way the fed handles their current assets will shape the financial markets now and for years to come.
If they sell the Treasuries too quickly or prematurely, the bonds will crater along with an unexpected surge in rates. If they don’t sell the bonds, US debt will skyrocket at a faster pace. The Fed certainly has our attention. Simply put, they are screwed either way, its just a matter of when they want to be blamed for the problems they cause: now or later.
Fed’s Balance Sheet:
Notice as the bank assets rose, so did the stock market. Now that the Fed has stopped buying Treasury securities, will the market continue to move higher without the help of the Fed?
Source: Federal Reserve