The bond market can’t help but worry that if Donald Trump succeeds in stimulating the economy, it could mean he will have a new reason to clash with the Fed.
That’s because if growth picks up, the U.S. central bank will move faster to normalization, not only by raising rates, but by addressing its sleeping giant of a balance sheet.
Fed officials, since their last meeting, have been talking about the day when they will stop holding onto the $4.5 trillion in Treasury and mortgage securities in their portfolio, and allow them to roll down. The Fed now replaces securities when they mature, but if it were to stop, the Treasury would have to pay back the Fed
source”cnbc”
