Perpetual Sells Bonds, Cuts Cash as Fed Slows Pace of Quantitative Tightening

SYDNEY—Australian money manager Perpetual sold off some government bonds and cut its cash holdings in its flagship fixed-income fund following the Federal Reserve’s recent decision to reduce its balance sheet at a slower pace.

After the spread of the Covid-19 pandemic, the U.S. central bank made enormous purchases of Treasurys and mortgage-backed securities in 2020 to stabilize financial markets. In June 2022, the Fed initiated a program to reverse this process, passively shrinking those holdings by allowing securities to “runoff” the portfolio without replacing them with new ones, a process known as quantitative tightening.

Source: WSJ