JAKARTA – The Federal Reserve (The Fed) recently made a surprising move by purchasing USD 20 billion in 3-year Treasury bonds in a single day. The action was taken without any official announcement, press conference, or widespread media coverage.

According to antthemortgageguy.com, the move resembled quantitative easing (QE), prompting major questions about what is truly happening behind the scenes.

Quantitative easing (QE) is a monetary policy in which a central bank purchases financial assets (such as government bonds or mortgage-backed securities) to inject money and credit into the economy.

Typically, QE is announced publicly with a high degree of transparency. However, this latest purchase occurred in silence.

An analyst noted that the move effectively amounts to money printing by the Fed, even if not physical, as the central bank simply credits the balance sheets of targeted banks. “This increases the money supply. The question is: what is the money for?”

That question found a partial answer on the same day, 9 May 2025, when the US Treasury attempted to auction USD 150 billion in bonds but managed to sell only USD 78 billion—leaving a substantial shortfall of USD 72 billion.

According to antthemortgageguy.com, to avoid a spike in yields that could unsettle markets, the Fed stepped in to cover part of the shortfall by purchasing USD 20 billion in bonds.

Rather than announcing the move as a new policy, the Fed remained silent.

This kind of action is often referred to as “Stealth QE”—the Fed injecting liquidity into the financial system without formally labelling it as quantitative easing.

Had the move been made publicly, markets might have responded negatively, viewing it as an admission that the economy is more fragile than claimed, or that interest rates are excessively high.

This bond purchase is not part of routine balance sheet maintenance. Several reasons make this move particularly noteworthy:

  • Tightening liquidity: The Fed does not make sudden purchases of this kind unless there is significant liquidity stress within the financial system.
  • Yield pressure: A sharp rise in long-term yields could have a detrimental effect on sectors such as banking, credit markets, and real estate.
  • Managing perception: By acting quietly, the Fed seeks to maintain market stability without spooking investors.

The move signals that there may be hidden pressures behind the scenes. If the economy were as strong as reported, a sudden, large-scale bond purchase would not be necessary.

While not a sign of panic, it is clearly a warning flag that something bears watching.

The Fed’s action indicates a determined effort to uphold stability without admitting that anything is wrong. The official statement that policy remains unchanged may not reflect the Fed’s actual moves. As the old saying goes, “Watch what they do, not what they say.”

Previously, turmoil in the government bond market in April was believed to have prompted President Donald Trump to delay tariff hikes for 90 days. (DK/MT/ZH)