Deck 4 — Treasury Demand

Why do price-sensitive marginal buyers matter?

They require a more attractive yield before buying, so yields may need to rise for new supply to clear.

What is the correct Fed demand argument?

The Fed is not conducting long-duration QE, so it is not removing meaningful 10-year duration from the private market.

Is ending QT the same as restarting QE?

No. Ending QT stops balance-sheet shrinkage; QE actively buys securities and removes duration from private investors.

How do I handle the outdated QT wording if challenged?

The implementation changed, but the relevant point remains that the Fed is not absorbing substantial long-end supply through QE.

Why can higher Japanese yields weaken Treasury demand?

Japanese investors have a more attractive domestic alternative, especially when dollar-hedging costs reduce Treasury returns.

What should I say about Japan without overstating it?

Higher Japanese yields and hedging costs are a headwind to marginal demand, not proof that Japan must sell outright.

Why does declining Chinese Treasury ownership matter?

It reduces support from a historically important official-sector buyer.

What if foreign demand strengthens?

Stronger buying would improve auction absorption, compress term premium, and weaken my higher-yield thesis.