By Rob Hanna
The Fed meeting this Tuesday and Wednesday is being closely watched by Wall St. Policy changes and rhetoric about future policy could set the tone for trading. A rate hike is currently expected, though there is some doubt. Futures are currently pricing in about a 76% chance of a hike on Wednesday.
In addition to rate policy, the Fed could also look to make changes to its Quantitative Tightening (QT) policy. An easy way for them to move from a hawkish to a more dovish approach at some point would be to reduce the monthly QT schedule. The current schedule calls for allowing up $50 billion per month to roll off the books through expirations that are not reinvested. The breakdown of the $50 billion is $20 billion in AMBS and $30 billion in treasuries. But looking at the treasury expiration schedule shows us that we are now in a period where $30 billion of expirations is becoming rare. This can be seen from the table below, which is taken from the Fed’s website.
Continue reading Why No Fed Action is Needed for Lighter Quantitative Tightening in the Coming Months
By Anthony B. Sanders
10-Year T-Note Yield UP From 2.06% To 2.90%
The Fed’s Quantitative Tightening (aka, Fed Shed) has resulted in a decline of their balance sheet of $245 BILLION since September 2017, about one ago.
And the 10-year Treasury Note yield has climbed from 2.06% in September 2017 to 2.90% today.
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By Kevin Muir
Today’s post will be short and sweet as I want to get it out close to the stock market open.
There is over $28 billion rolling off the Fed’s balance sheet today.
As readers will recall, I believe the QT maturity days result in an outsized negative effect on risk assets (Pink Tickets on QT Days).
Continue reading QT vs. FOMC Drift