Brian Chappatta, Columnist

Fed Is Content to Let Sleeping Bond Traders Lie

The central bank pushed off any policy decisions that could have disrupted the Treasury market.

July 29, 2020 at 8:46 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Not rocking the boat.
Photographer: Andrew Harrer/Bloomberg

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The message to bond traders from the latest Federal Reserve meeting: Chair Jerome Powell and his colleagues see no problems with the $20 trillion U.S. Treasury market and certainly aren’t about to do anything that would disturb the peace.

The Federal Open Market Committee decided to leave the fed funds rate unchanged in a range of 0% to 0.25%, keep its asset purchases “at least at the current pace,” remained committed to “using its full range of tools to support the U.S. economy in this challenging time” and otherwise adjusted its outlook only modestly in the face of the coronavirus pandemic. The statement didn’t mention any adjustment to forward guidance, such as linking interest-rate increases to specific inflation or unemployment levels — something officials have been hinting at for weeks.