Selling US Govt Bonds in large quantities should by itself cause upward pressure on interest rates.
Btw, do you have an idea where we stand now in the process of dumping the bonds and MBS’s from the $4 trillion high point? E.g. how much left to buy back at the $50B per month rate?
$4 trillion dumped at $50B per month would be 80 months.
One would think when we’ve finished “quantitative tightening” markets would get buoyant.
What makes this really interesting is that the FED has to engage in a difficult balancing act. If they are holding 30-year mortgages paying below 3.5% and current rates have risen close to the 5% level within the last few months, the FED loses a lot of money every time they sell off $50 billion of these bonds (i.e., buyers of a 3.5% mortgage are going to pay a discounted price when the prevailing rate for new mortgages is 5%).
The same goes for U.S. Treasury bonds, where the yield on a 10-year note has risen from below 1.6% a few years ago to above 3% in recent months.