so close but not far. in one lens, it is indeed bearish that they have to do this bc intervention shouldn’t be necessary in a healthy system. and it’s not QE. although if you’re going by that logic, then technically QE is bearish as well, since you “have to do it.” so the logic already falls apart instantly but to explain the mechanics: it’s bullish because the paper you’re replacing is currently sitting idle. it’s unproductive. it’s money that was borrowed 20-30Y ago to find a productive source then. SLR for dealers doesn’t distinguish b/w 100M of 1Y vs 30Y paper. but 30Y paper has much higher VaR because of duration. and increasingly off the run bonds are much harder to move - in todays age, effectively toxic assets that prevent dealers from putting on new capacity. you only need to look as far back as SVB to see why duration matters. SVB categorized its long term holdings (like USTs) as HTM, and ignored VaR so there ended up being a duration mismatch the bank wasn’t liquid enough for this is not withstanding the fact that old treasury bonds likely have impaired rates relative to what is mkt today, which is why TIPS auctions see much better demand in auctions for issues of the same term so yes. if you think about if from a pure $1 to $1 liquidity perspective, it’s just a swap. but it is not that simple