A $1 trillion pain trade in treasuries divides top bond dealers

To appreciate just how important the Federal Reserve has been to the U.S. Treasury, consider this simple fact: It alone financed roughly 40 percent of America’s budget deficit last year. So as Fed officials talk up the possibility of unwinding the central bank’s crisis-era bond holdings later this year, figuring out what will happen when the U.S. loses its biggest source of funding has become a pressing concern. Of course, finding ready buyers in the Treasury market —- arguably the safest and mo...

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