HALISTER1: Fed Rosengren’s Idea to Raise 10Y Yields Is ‘Highly Remote’: CS

Fed Rosengren’s Idea to Raise 10Y Yields Is ‘Highly Remote’: CS

(Bloomberg) -- The probability of the Fed adopting Boston Fed President Eric Rosengren’s proposal to change the central bank’s balance sheet composition and steepen the yield curve in order to address financial stability concerns seems “highly remote,” CS strategists Praveen Korapaty, William Marshall and Jonathan Cohn write in note dated Monday.
  • Suggestion is “technically feasible” as about 25% of Fed’s Treasury holdings mature in 10+ years
  • But Fed has traditionally categorized monetary policy as a “blunt tool ill equipped to address bubbles” and should instead use macroprudential policy in such situations
  • Rosengren appears “uniquely focused” on stability risks surrounding commercial real estate, highlighted in Yellen’s September press conference, likely why he dissented
    • Suggests his thinking isn’t in line with broader FOMC views
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Eric Rosengren (Federal Reserve Bank of Boston)
Jonathan Cohn (Credit Suisse Group AG)
Praveen Korapaty (Credit Suisse Group AG)
William Marshall (Credit Suisse Group AG)

Topics
Key Comm. Real Estate News

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