Capital Markets Examiner School, Providence, RI

Primary Dealers

 Primary dealers are trading counterparties of the New York Fed trading desk in its implementation of monetary policy.

What Affects the Yield Curve?

 Primary dealers affect the yield curve primarily through the implementation of monetary policy, including all activity within the trading desk at the New York Fed.

 The Federal Reserve makes decisions based on its assessment of economic and market conditions; however, fiscal policy will influence these conditions.

 Current yield curve is not a true representation of market conditions. There is much work to do to normalize the Federal Reserve’s balance sheet which will cause some volatility.