Fed Shifts MBS Strategy After Quantitative Tightening Ends

The Federal Reserve has announced a significant shift in its approach to managing its balance sheet, signaling the end of quantitative tightening (QT) and introducing a new strategy for mortgage-backed securities. The central bank will now reinvest principal repayments received from its holdings of mortgage-backed securities into short-term Treasury securities, instead of directly purchasing new MBS. This move has implications for financial markets and the overall economy.