What has been particularly hurting the market is the Fed’s quantitative tightening, which has resulted in the central bank not replenishing bonds in its portfolio that have matured. The market had caught up with the Fed’s rate actions (an increase of 500 basis points in 19 months) and balance sheet reduction. Not just the markets, even several Fed officials had alluded to the market’s view that the bond market was doing the central bank’s job.
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