Effective June 11, 2020, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to increase the System Open Market Account (SOMA) holdings of Treasury securities, agency mortgage-backed securities (MBS), and agency commercial mortgage-backed securities (CMBS) at least at the current pace to sustain the smooth functioning of markets for these securities, thereby fostering effective transmission of monetary policy to broader financial conditions.
Consistent with this directive, the Desk plans to continue to increase SOMA holdings of Treasury securities at the current pace, which is the equivalent of approximately $80 billion per month. Treasury purchases will be conducted on a monthly basis, starting with the period from mid-June to mid-July, and will continue to be conducted across a range of maturities and security types. The Desk will continue to roll over at auction all principal payments from SOMA holdings of maturing Treasury securities.
Similarly, the Desk plans to continue to increase SOMA holdings of agency MBS at the current pace, which is the equivalent of approximately $40 billion per month. Agency MBS purchases will be conducted on a monthly basis, starting with the period from mid-June to mid-July. Total purchases during this monthly period are expected to be approximately $96 billion, which includes approximately $56 billion in purchases to reinvest principal payments from existing SOMA holdings of agency debt and agency MBS anticipated to be received in the month of June. Agency MBS purchases will continue to generally be concentrated in recently produced coupons in 30-year and 15-year fixed rate agency MBS in the To-Be-Announced (TBA) market.
The Desk will announce the planned monthly amount of Treasury and agency MBS purchases on or around the ninth business day of each month and will release tentative schedules of purchase operations twice a month, on or around the ninth and the nineteenth business days. The first monthly purchase period will begin on June 12, 2020 and continue through July 13, 2020. Updated information on purchase amounts and schedules can be found on the Treasury Securities Operational Details and the Agency MBS Operation Schedule pages.
In addition, the Desk plans to continue to increase SOMA holdings of agency CMBS at the current pace by conducting weekly operations of approximately $250 to $500 million. Purchases will include the reinvestment of principal payments from SOMA holdings of agency CMBS. Purchases will continue to be secured primarily by multifamily home mortgages that are guaranteed fully as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae and that the Desk has determined are suitable for purchase. Updated information on purchase amounts and the schedule can be found on the Agency CMBS Operations Schedule page.
Consistent with the FOMC directive, the Desk is prepared to increase the size and adjust the composition of its purchase operations as needed to sustain the smooth functioning of the Treasury, agency MBS, and agency CMBS markets. Additional information on Treasury, agency MBS, and agency CMBS purchases can be found in the following locations: