UBS Predicts Fed Treasury Purchases in 2026

Key Takeaways:

• Fed reinvests agency principal in Treasury bills post-2025.
• No official confirmation of a $40B purchase plan.
• Treasury focuses on cash management buybacks, not Fed purchases.

The Federal Reserve’s $40 billion per month Treasury bond purchase in early 2026 is not confirmed by primary sources. Official documents indicate QT ends December 2025, after which the Fed rolls over principal into T-bills without a specified purchase amount.

UBS’s projection suggests significant activity, though the official materials from the Federal Reserve and U.S. Treasury do not confirm explicit $40B/month purchases. This highlights potential market interpretations and reactions.

UBS, a major global bank, speculates that in early 2026, the Federal Reserve will engage in substantial Treasury bond purchases. Official Federal Reserve documents do not list specific monthly figures. The Federal Reserve will end quantitative tightening in December 2025, rolling over all Treasury principal and reinvesting agency MBS principal into T-bills. However, no precise dollar amount is indicated.

The potential scale of the proposed purchases could significantly influence financial markets, notably in terms of liquidity. Without official confirmation, the market’s response hinges on the Fed’s stated balance-sheet policies. Official sources indicate a shift from QT to steady reinvestment, impacting USD liquidity positively and aligning with previous large-scale asset purchases. Historical precedents suggest Fed actions like these support high-liquidity assets. The market anticipates impacts, especially in sectors such as cryptocurrencies, known for reactivity to liquidity shifts. The Federal Reserve’s strategy, confirmed for post-2025, emphasizes maintaining a stable balance, reinforcing monitoring of principal rollovers into T-bills. Furthermore, continued oversight and strategic decisions are likely, given historical trends in balance sheet management.