The Fed's balance sheet reduction triggers "supply shortage," with the size of 10-year U.S. Treasury bond deliveries failing to reach an eight-year high.

Due to the impact of the Federal Reserve's reduction in holdings of US Treasury bonds since 2022, there has been noticeable friction in the US Treasury bond market in recent times. The latest data shows that the size of delivery failures for 10-year US Treasury bonds this month has soared to the highest level in eight years, highlighting the supply-demand imbalance of key ten-year US bonds in the repo market.