Bank of America: Potential Agreement Between U.S. Treasury and Federal Reserve Won't Shake the Market

PANews February 12 News, U.S. bank economists pointed out that investor speculation about a potential “collaborative agreement” between the Federal Reserve and the U.S. Treasury is raising questions. The bank believes that such an agreement is “not clearly defined” and that the likelihood has probably already been priced into the market. “Unless the content of the agreement exceeds current market discussions, any new agreement is unlikely to trigger substantial price fluctuations.” Bank of America stated that the agreement would mainly focus on the Fed’s balance sheet reduction and U.S. debt issuance. Economists expect that if monetary policy is affected (which they consider highly unlikely) or if the Treasury limits long-term debt issuance (which Bank of America considers possible), the impact on the market would be greater.