Details of the Trump administration's MBS purchase plan revealed: $15 billion per month hedging against Federal Reserve balance sheet reduction

【Crypto World】U.S. Treasury Secretary Janet Yellen recently revealed an interesting detail. The mortgage-backed securities (MBS) purchase program launched by the Trump administration is primarily designed to keep the pace of purchases synchronized with the Federal Reserve’s balance sheet reduction.

How exactly does this work? Currently, the Federal Reserve is gradually withdrawing about $15 billion worth of bonds from its balance sheet each month, a process called “balance sheet runoff.” Yellen’s point is that the government uses MBS purchases to hedge against this move — as the Fed tightens liquidity in one direction, the government supports market liquidity on the other side.

The underlying logic is actually about balance. If the Fed were to shrink its balance sheet unilaterally without other funds entering the market, liquidity could become tight. Therefore, the government’s MBS purchase plan acts as a “relay baton” — ensuring that capital supply remains relatively stable. For investors, this means that at least in the MBS and related bond markets, there is less need to worry about sudden liquidity shortages. Of course, this coordinated policy also impacts the overall asset market pricing environment.