The Federal Reserve bought $3.4 billion of Treasuries as part of a program to reinvest principal payments on its mortgage holdings to prevent money from being drained out of the financial system.
The Fed acquired 12 of the 27 Treasuries listed for possible purchase. The securities mature from August 2016 to November 2018, the New York Fed said in a statement.
The Fed has bought $17.643 billion of Treasuries since it began the program on Aug. 17. Policy makers are seeking to keep holdings in the System Open Market Account, or SOMA, at about $2.054 trillion by using the proceeds of principal payments from its agency mortgage-backed securities and agency debt.
The Fed maintains a 35 percent per security limit of the amount outstanding for each specific Treasury it holds in the account. The central bank makes the securities available for loan to dealers against Treasury general collateral on an overnight basis. Dealers bid in a multiple-price auction held every day at noon New York time through its securities lending program.
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