by Calculated Risk on 8/10/2009 10:56:00 AM

The Fed has been a steady buyer of Treasury securities. It appears this program will end in September.

From the last FOMC statement:

[T]he Federal Reserve will buy up to $300 billion of Treasury securities by autumn.

From Bloomberg last week: Fed Set to End Purchases, Two Former Governors Say

The Federal Reserve is set to halt its purchases of up to $300 billion in U.S. Treasuries in mid- September as scheduled, and will probably announce the decision next week, two former central bank governors said.

Click on graph for larger image in new window.

According to the Cleveland Fed:

The Fed purchased $6.496 billion in Treasury securities on July 30, focused in the three–to-four year sector, and another $7.248 billion on August 5 with maturities between four and seven years.

To date, the Fed has purchased $236 billion of Treasuries and will purchase up to $300 billion by autumn.

The New York Fed reports additional purchases of $7.0 billion on August 6 (mostly 7 year maturity), and $6.594 billion on August 10 (mostly 3 to 4 year).

That puts the total Fed purchases at $250 billion of Treasuries, and the Fed will probably purchase $50 billion more - and then stop in September.

This will be an interesting sentence in the FOMC statement on Wednesday - and it will be interesting to see the reaction in the Treasury markets. The yield on the 10 year note is already creeping back up toward 4% (3.82% this morning), and that will push up mortgage rates.

Also from Bloomberg, on CRE and the Fed: Fed Focusing on Real-Estate Recession as Bernanke Convenes FOMC

The [CRE] industry is likely to be high on the agenda when Bernanke and his colleagues sit down in Washington tomorrow for the Federal Open Market Committee meeting on monetary policy. ... If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect ...

There is no question private nonresidential real estate will be under pressure from some time - this is no surprise.