QE Unwind continues via the sharp drop in MBS.
Where is the Fed’s “U-Turn” that Wall Street promised us?
But where the heck is the “U-Turn?”
Fed sheds $46 Billion, Total QE Unwind Reaches $580 Billion. Assets drop to lowest level since Nov 2013.
Then there’s the sinkhole of $1.5 trillion in MBS and $617 billion in Treasuries that mature in over 10 years.
In relationship to GDP, the balance sheet will continue to shrink until some magic unknown point is reached.
The albatross of $617 billion in bonds that mature in over 10 years.
A plan is forming with a slow-motion component, and everyone wants to get rid of MBS
Getting rid of MBS faster and shifting to short-term Treasury bills will be on the list.
QE may restart only if things get really ugly – think Financial Crisis.