Fed to Begin Buying Treasuries on December 12

Summary

The Federal Reserve announced that it will start purchasing Treasury bills from December 12, 2025, to manage market liquidity. This move was unexpected as the market anticipated the purchases to begin in January 2026.Golden Finance+ 2

Impact Analysis

So the Fed is basically admitting that liquidity is tighter than they anticipated. By starting the $40 billion monthly Treasury bill purchases earlier than expected, they’re signaling concerns about maintaining sufficient reserves. This move, coupled with the recent 25 basis point rate cut to 3.5%-3.75%, suggests they’re trying to preempt any potential liquidity crunch. The timing is crucial—doing this now rather than waiting until January indicates they see immediate risks. The yield curve’s slight dip post-announcement reflects market surprise and a shift in expectations. For us, this means looking at short-term bonds and financials that might benefit from improved liquidity. However, we should also be cautious about the underlying reasons for this urgency—potential economic softness or financial instability. Bottom line—this is a defensive move by the Fed, and we need to watch how the market digests this over the next few weeks.AnueSec+ 3