The Fed’s Liabilities: How Far Can QT Go? What’s the Lowest Possible Level of the Balance Sheet without Blowing Stuff Up? by Wolf Richter • Mar 23, 2024 • 242 Comments Reserves, Domestic ON RRPs, Currency in Circulation, the TGA, and official foreign RRPs determine how far QT can go.
What Powell Said About Slowing the Pace of QT: “By Going Slower, You Can Get Farther” by Wolf Richter • Mar 20, 2024 • 158 Comments They learned a lesson from the mess in 2019, which Powell referred to several times.
Fed Still Sees 3 Rate Cuts in 2024, But 2-Cut Scenario only 1 Participant Short, Holds Rates at 5.50% Top of Range, QT Continues as Planned by Wolf Richter • Mar 20, 2024 • 208 Comments Raises longer-run rate projection (higher for longer), and projections for inflation and GDP in 2024.
Short-Term Treasury Market Walks Away from Rate-Cut Mania, Inflation Has Upper Hand by Wolf Richter • Mar 15, 2024 • 231 Comments One-year yield rose to 5.05% today, highest since December 12.
Fed’s QT Going Forward: the Treasury Maturity Schedule & Roll-off under Current QT Plan, and How a New QT Plan Might Fit by Wolf Richter • Mar 11, 2024 • 162 Comments Treasury QT will naturally slow in June 2025 when the Fed runs out of T-bills. Fed governors have teased us with interesting options.
Fed Balance Sheet QT: -$1.43 Trillion from Peak, to $7.54 Trillion, Lowest since February 2021 by Wolf Richter • Mar 7, 2024 • 159 Comments Quantitative Tightening has now removed 35% of Treasury securities and 25% of MBS that pandemic QE had added.
There’s a “New Upside Risk” in Town: “Pent-up Exuberance” – Fed’s Bostic by Wolf Richter • Mar 5, 2024 • 201 Comments If it’s unleashed at the “first hint” of a rate cut, it’ll “create upward pressure on prices.” But it may be too late, it has been unleashed by rate-cut mania.
Fed Discusses Balance Sheet “Normalization”: ON RRPs & MBS Go to Zero, Reserves Drop a Lot, Slower QT Reduces Risk of “Accidents,” SRF Calms Repo Market, Future QE without Increasing the Balance Sheet by Wolf Richter • Mar 2, 2024 • 186 Comments The Fed’s Waller and Logan lay out some basic principles.
The Fed Wants to Drive QT as Far as Possible Without Blowing Stuff Up, and it’s Working on a Plan: FOMC Minutes by Wolf Richter • Feb 22, 2024 • 121 Comments QT-1 blew up the repo market. This time around, the Fed wants to avoid that type of debacle so it wouldn’t have to “prematurely” end QT-2.
Higher for Longer Inflation & Interest Rates Not Over Until the Fat Lady Sings? Waiting for the 2-Year Treasury Yield to Overshoot by Wolf Richter • Feb 18, 2024 • 214 Comments Four decades of history say it’s not over until the 2-year yield overshoots the EFFR. It has undershot for a year, and inflation is taking off again.
