...the Fed is being about as "transparent" with respect to its intentions as is possible. The below from a speech given today from N.Y. Fed leader Dudley. As I said before, with the Fed vacuuming up massive amounts of duration, the risk profile of "America's Portfolio" has added considerably more risk.
Safe haven assets are in such low supply that the very definition of "safe" is being expanded. This includes the available collateral pool for high-level financial transactions, which is where I believe the first cracks will show during the Fall.
Our view is that asset purchases work primarily through the asset side of the balance sheet by transferring duration risk from the private sector to the central bank’s balance sheet. This pushes down risk premia, and prompts private sector investors to move into riskier assets. As a result, financial market conditions ease, supporting wealth and aggregate demand. The fact that such purchases increase the amount of reserves in the banking system and the size of the monetary base is a byproduct—not the goal—of these actions.