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July 15, 2020, 2:22 p.m. EDT

New York Fed official says it isn't focused on bond yields when assessing market dysfunctions

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By Sunny Oh

Lorie Logan, a senior official at the New York Federal Reserve, said the central bank did not measure market functioning based on the level of U.S. government bond yields but rather on measures of liquidity and price discrepancies within those debt markets. In a webinar for the Securities Industry and Financial Markets Association, the manager of the New York Fed's bond-buying operations conceded the central bank's purchases may have reduced upward pressure on bond yields that may have otherwise resulted from the increased issuance of new debt. The U.S. central bank ramped up its Treasurys and agency mortgage-backed bond purchases since March in a bid to restore functioning in those markets, after a surge of selling seized up the bond-market. Fed officials and market participants have noted that liquidity in bond trading had been largely restored due to the central bank's interventions. The 10-year Treasury yield traded at 0.632%. Bond prices move in the opposite direction of yields.

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