Wall Street comments on "400 billion bond purchase": The Federal Reserve returns as the "top buyer" of US bonds to ease financing pressure, and trading such as interest rate swaps welcome favorable conditions.

Mingran App learned that the Federal Reserve's plan to purchase $400 billion in government bonds each month has prompted Wall Street banks to revise their forecasts for debt issuance in 2026, and has also pushed borrowing costs down. The Federal Reserve will start buying government bonds to ease short-term interest rate pressures by rebuilding reserves in the financial system. Some banks estimate that the Federal Reserve may buy nearly $525 billion in government bonds in 2026. Strategists predict that these purchases will help alleviate market pressures and have a positive impact on swap spreads and SOFR-Federal Fund rate differentials trading, but may not completely eliminate market volatility, especially around the end of the year.