---
title: "Federal Reserve RMP = Will purchase $500 billion in short-term U.S. Treasury bonds next year? Wall Street: The Federal Reserve is very aggressive!"
description: "The Federal Reserve's RMP plan is much stronger than market expectations. Institutions led by Barclays and JPMorgan Chase expect that the Federal Reserve may absorb about $500 billion in short-term go"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/269448356.md"
published_at: "2025-12-12T00:33:56.000Z"
---

# Federal Reserve RMP = Will purchase $500 billion in short-term U.S. Treasury bonds next year? Wall Street: The Federal Reserve is very aggressive!

> The Federal Reserve's RMP plan is much stronger than market expectations. Institutions led by Barclays and JPMorgan Chase expect that the Federal Reserve may absorb about $500 billion in short-term government bonds next year, making it the dominant buyer in the short-term bond market over the next year. Analysts believe that this aggressive move demonstrates the Federal Reserve's "extremely low tolerance" for financing pressure

The Federal Reserve announced a Reserve Management Plan (RMP) to purchase $40 billion in short-term Treasury securities each month, a move that far exceeds market expectations, prompting major Wall Street investment banks to revise their debt issuance forecasts for 2026.

Wall Street Insight previously mentioned that on the same day the Federal Reserve announced this plan, the New York Fed stated it would release the first plan on December 11, 2025, and begin purchasing on December 12. This also means that the Federal Reserve will purchase $8.2 billion in short-term Treasury bills (T-bills) this Friday and plans to buy $40 billion in the following month to rebuild bank system reserves, aiming to alleviate short-term interest rate pressures through the reconstruction of financial system reserves.

The scale of this operation not only exceeds previous expectations but will also be combined with the bank's initiative to purchase $14.4 billion in short-term Treasury securities each month starting in December to reinvest institutional debt repayments. **Institutions led by Barclays and JP Morgan expect that the Federal Reserve may absorb about $500 billion in short-term Treasury securities next year, a move seen by the market as a signal of aggressive liquidity injection.**

As a result of this news, market borrowing costs fell sharply. On Wednesday, trading volume in short-term interest rate futures surged, and the two-year swap spread widened to its highest level since April, indicating that expectations for pressure in the short-term financing market have significantly eased. Strategists generally believe these measures will effectively alleviate months of accumulated financing pressure after the Federal Reserve stops balance sheet reduction.

Major financial institutions currently agree that the Federal Reserve will become the dominant buyer in the short-term Treasury market over the next year. Analysts point out that this move by the central bank will significantly squeeze the supply of notes available to private investors, thereby creating long-term benefits for swap spreads and the basis trade between the secured overnight financing rate (SOFR) and the federal funds rate.

## Wall Street Significantly Raises Bond Purchase Expectations

According to Bloomberg, as the Federal Reserve announced its aggressive purchasing plan, several major Wall Street banks quickly adjusted their estimates of the supply and demand relationship for Treasury securities in 2026.

Barclays' strategists Samuel Earl and Demi Hu now estimate that the total amount of short-term Treasury securities purchased by the Federal Reserve in 2026 could approach $525 billion, significantly higher than the previous forecast of $345 billion. This means that the net issuance available to private investors will plummet from the previously estimated $400 billion to $220 billion.

**The bank believes that the Federal Reserve's aggressive move demonstrates a "very low tolerance" for financing pressure, and expects the purchasing pace to remain high in the first quarter of next year, potentially decreasing from $55 billion per month (including MBS reinvestment) to $25 billion by April.**

JP Morgan has also raised its expectations. Strategists Jay Barry and Teresa Ho expect the Federal Reserve to maintain a purchase scale of $40 billion per month until mid-April, then reduce it to $20 billion per month. Combined with approximately $15 billion in MBS reinvestment each month, the total amount purchased by the Federal Reserve in the secondary market in 2026 will reach $490 billionThis will result in a net issuance of only $274 billion in short-term Treasury bonds next year.

Gennadiy Goldberg and Jan Nevruzi from TD Securities also expect that the Federal Reserve will purchase $425 billion in notes through RMP and MBS reinvestment in fiscal year 2026, absorbing the vast majority of net supply.

## Aggressive Strategy Alleviates Liquidity Concerns

The Federal Reserve's action is widely interpreted as a preemptive measure against volatility in the repurchase market.

Blake Gwinn and Izaac Brook from RBC Capital Markets acknowledge that they previously underestimated the Federal Reserve's "discomfort" with fluctuations in repurchase rates within the month, noting that the Fed seems to be more focused on absorbing Treasury issuance rather than simply increasing reserves. Matthew Raskin and Steven Zeng from Deutsche Bank point out that the Fed has initiated this process earlier than in 2019, indicating a more cautious approach in managing the transition to abundant reserves, which will help further stabilize the repurchase market.

Bank of America strategists Mark Cabana and Katie Craig warn that the Federal Reserve may need to maintain high levels of purchasing for a longer period. They estimate that the current RMP size can only replenish about $80 billion of excess cash by mid-April, while achieving ideal results may require replenishing $150 billion. **The bank also noted that if the Fed perceives that note investors are adversely affected, it may expand the purchase range to include Treasury bonds with maturities of three years.**

## Market Volatility Not Completely Eliminated

Although the Federal Reserve's intervention is seen as positive, some analysts remain cautious about market stability in the short term.

Angelo Manolatos and Mike Schumacher from Wells Fargo state that although the monthly scale of $40 billion is at the expected upper limit and constitutes a "significant tailwind" for the SOFR and federal funds rate spread as well as the widening U.S. swap spreads, it is not a "cure-all" for liquidity by the end of the year. They expect that the financing market will still face some pressure around the end of the year.

CIBC strategists express a similar view, believing that these measures cannot completely eliminate volatility, as the Fed's purchase volume in December is unlikely to exceed the overnight funding demand accumulated by the end of the year, when banks typically restrict repurchase market activities to strengthen their balance sheets.

Joseph Abate from SMBC Nikko adds that the Federal Reserve is attempting to actively manage the issue of excess bank reserves, and the success of this strategy will depend on the willingness of market participants to utilize the Stand Repo Facility

### Related Stocks

- [JPM.US - JPMorgan Chase](https://longbridge.com/en/quote/JPM.US.md)
- [BCS.US - Barclays](https://longbridge.com/en/quote/BCS.US.md)

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| 摩根大通資產管理發佈 2026 年退休指南 \| 摩根大通股票新聞 | 摩根大通資產管理公司發佈了其 2026 年退休指南，提供有關退休收入、投資規劃和社會保障的見解。主要主題包括設定明確的儲蓄目標的重要性、小型企業工作場所退休計劃的好處，以及社會保障索賠策略的複雜性。該指南強調了應對退休挑戰所需的實用工具，突 | [Link](https://longbridge.com/en/news/277078446.md) |
| 2025 年全球工業 “一場奇特的反彈” | 2025 年全球製造業表現出韌性，摩根大通指出，全球工業產出在經歷低迷後重新抬頭，且商品部門在貿易摩擦中表現優於服務業。研報分析了需求端的資本開支、AI 熱潮及非科技部門的復甦，預計未來幾個月全球工業產出將保持 2%-3% 的年化增速。儘管 | [Link](https://longbridge.com/en/news/276871525.md) |
| 觀望財案及滙控業績 市場暫未有方向｜古天后 | 2 月 25 日，美股在大型企業合作協議的推動下回升，道指上漲 370 點，標指和納指也有所上漲。Meta 與 AMD 達成合作，Meta 將採購 AMD 晶片並獲得認股權，AMD 股價上漲 8.8%。儘管美股回暖，加密貨幣市場依然疲弱，比 | [Link](https://longbridge.com/en/news/276813442.md) |
| 渣打去年税前多賺 16% 增派末期息至 49 美仙 擬回購 15 億美元股份 | 渣打集團（2888）公佈去年業績，税前溢利 69.63 億美元，按年升 16%；純利 50.85 億美元，按年升 26%。第四季税前溢利 8.14 億美元，按年升 2%。擬派末期息 49 美仙，增 1.3 倍，全年共派息 61 美仙，增 6 | [Link](https://longbridge.com/en/news/276690671.md) |
| 1750 億美元 “關税退款”！對美股是 “財政刺激”，對美債是 “增加債務”，對金銀是 “不確定性重來” | 1750 億美元潛在退款短期利好美股，零售消費股受益，但該裁決導致關税收入缺失，未來十年或為美債增加超 2 萬億美元負擔。特朗普表態將通過其他途徑重徵關税，政策不確定性加劇，黃金週五暴漲 2% 突破 5100 美元，白銀漲 8%，避險情緒升 | [Link](https://longbridge.com/en/news/276502057.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.