Sack, Brian
Some of the staff work that calibrates the economic impact of the Federal Reserve’s balance sheet policies assumes that the effects on yields and financial conditions are driven by the amount of ten-year equivalents that the Fed takes into its portfolio.
By that metric, the effect of the Maturity Extension Program is about equal in size to that of the large-scale asset purchase program that ended in June of this year (what we have referred to as LSAP2). This fact was highlighted in a recent post to the Liberty Street Economics blog.4 In both cases, the effect of the program was to remove about $400 billion of 10-year equivalents from the market.