TRUMANSON: The Federal Reserve is expected to raise its benchmark overnight interest rate by a quarter of a percentage point to 1.25%.
The move follows months of talk of a “pause” in central bank purchases of assets, including bonds and mortgage-backed securities.
TRUMANNON: Traders are betting the Fed will start moving away from bond buying.
Investors believe it will ease interest rate hikes by slowing the pace of interest-rate increases that has become routine in recent years.
TRUMANNSON: If you’re buying bonds, you have to buy them at a discount, and this means lower yields.
So if the Fed starts buying a lot of debt, you’re essentially buying a $50,000 bond that you can’t get any of the interest you would get on it.
CLINTON: In the past, we’ve had to take some actions to stabilize markets.
We’re starting to do that now.
TRUMP: Well, the Fed has already begun to buy trillions of dollars in bonds, and that will not continue.
We need to stop this process of destroying the economy and the jobs of Americans.
Trump’s campaign said in a statement that the Federal Reserve would begin buying Treasury securities, mortgage-based securities, and other financial instruments that are not tied to fixed-income or corporate bonds.
It is also expected to buy a significant amount of mortgage- backed securities.
The Federal Reserve has been buying up the assets of financial institutions for more than a decade.
But in recent months, investors have begun to worry that the Fed may be tightening monetary policy as a way of stabilizing the market.
Traders believe the Fed is moving away.
And the markets believe it.
TRUMANON: The Fed has been trying to get rid of all of these debt-servicing obligations that are tied to bond issuers.
They’ve been doing it, but the bond markets have been taking over the process.
They don’t have a clue what they’re doing.
I think the Fed wants to get away from that, too.
And I think that they’ve already begun taking some actions.
The Fed bought $1.6 trillion worth of bonds last year, and by October the total was $4.5 trillion.
So it seems to me that if you look at the data, and you look around the world, that the bond market is taking over.
Trump said he thinks the Fed’s buying of bonds is going to “destroy the economy.”
TRUMP: I don’t believe that the central bank has a monopoly on the power to print money.
I believe the central banker has a choice to make: He can either print money or he can print it and then the people will go to jail, and we’ll all be better off.
And that’s what’s happening.