Pozsar Says Markets to Sidestep ‘Mayhem’ If Fed Relief Expires

With money market traders fretting over the “will they, won’t they” extension of Federal Reserve regulatory relief for Treasuries, influential strategist Zoltan Pozsar’s take on the issue may be reassuring.

“Neither the Fed nor the market should fear mayhem if the exemption expires,” the Credit Suisse Group AG analyst wrote in a note to clients Tuesday. It “won’t lead to forced sales, neither will it cause a constraint on the functioning of the Treasury repo market.”

A Fed tweak to a rule in April exempted Treasuries and reserve balances at the central bank from institutions’ supplementary leverage ...