President Donald Trump has been unabashedly vocal in his criticism of the Fed's interest rate hikes, but the president has been quiet on another important Fed policy that may also be a big factor behind the rise in longer-term rates that influence all sorts of loans, including home mortgages.
On the surface, the Fed's slow and steady approach to raising short-term interest rates once a quarter is less aggressive than it's been in past cycles. But it's the the Fed's parallel balance sheet moves that have gone under the radar, except in the bond market where it is closely monitored.
That's because the Fed has stepped back as a buyer in the Treasury market, at a time when the Federal government is also issuing a mountain of new debt. Since last year, the Fed has been gradually reducing the purchases it makes to replace Treasury and mortgage securities on its balance sheet as they mature.