According to Hoisington data, from December 2025 to the end of June 2026, the Federal Reserve's holdings of U.S. Treasury securities increased by approximately $290 billion, a seven-month increase approaching the approximately $320 billion increase during the pandemic, and total holdings also reached a new high. Part of this increase comes from reserve management purchases to maintain sufficient reserves, and another part is the reinvestment of principal from maturing MBS; the latter merely adjusts the asset structure and does not expand the balance sheet by an equivalent amount. The New York Fed initially conducted $40 billion in reserve management purchases per month, but this has decreased to $10 billion since the beginning of summer. According to research by the New York Fed, the current purchases have indeed increased demand for short-term debt, eased pressure in the repurchase market, and marginally lowered short-term financing costs, but they are still incomparable to the pandemic-driven QE—the Fed purchased nearly $2 trillion in medium- and long-term Treasury securities in 2020 alone. This only proves that balance sheet reduction has ended, and the Fed has once again become an important buyer in the short-term debt market, but it has not yet entered into QE or YCC.

The NI225 closed up 506.45 points, or 0.74%, at 69,220.25 on Monday, August 17.

Australia's S&P/ASX 200 index closed down 49.90 points, or 0.55%, at 9065.30 on Monday, August 17.

Ukraine's state-owned oil and gas company, Naftogaz, said Russia launched 13 attacks on its Navtogos facilities in the past week.

Euro Stoxx 50 futures rose 0.32%, German DAX futures rose 0.27%, FCHI futures rose 0.24%, and UK FTSE 100 futures rose 0.2%.

The U.S. Treasury will auction $16 billion in 20-year Treasury notes on Wednesday, with a pre-sale trading yield of approximately 5.27%. If this yield holds until the auction, it will be the highest since the resumption of issuance of this maturity in 2020. Previously, 10-year and 30-year Treasury notes were auctioned at 4.683% and 5.216% respectively, the highest auction yields since 2007 and 2001. However, a "high yield" does not necessarily mean a "failed auction": last week, the bid-to-cover ratio for the 30-year note still reached 2.39, indicating that demand is not out of control. The more important factor this time is whether the winning yield is higher than the pre-sale trading level, i.e., whether there is a "tail difference," as well as the proportion of indirect bidders and the proportion of primary dealers forced to take over. If the 20-year yield continues to show a tail-end spread and dealer acceptance increases, it indicates that even with cooling expectations of interest rate hikes, investors are still demanding higher fiscal, inflationary, and term compensation, and long-term interest rates are gradually deviating from the Fed's policy path; conversely, if high yields attract long-term funds, it means the market is still willing to absorb supply.