Bank of America: Potential agreement between US Treasury and Federal Reserve difficult to shake market

Economists at Bank of America pointed out that speculation among investors about a possible "coordination agreement" between the Federal Reserve and the U.S. Treasury is raising questions. The bank believes that such an agreement is still "poorly defined" and is likely already priced in by the market. "Unless the agreement goes beyond the current market discussions, any new agreement is unlikely to cause significant price fluctuations." Bank of America stated that the agreement will mainly revolve around the Federal Reserve reducing its balance sheet and the issuance of U.S. Treasury bonds. Economists predict that if monetary policy is affected or the Treasury limits the issuance of long-term bonds, the impact on the market will be greater.