9 Charts on Quantitative Tightening

By Callum Thomas

Quantitative tightening has been running at full speed for almost 5 months now (and for a total period of 17 months since commencing in October 2017), and with QT finally coming front of mind for investors I thought it would be a good idea to update some of the charts from my previous “8 Charts on Quantitative Tightening” article (as well as a couple of new charts and indicators).

It’s also very timely to revisit this topic as the Fed has begun to get distinctly cold feet on rate hikes and QT (quantitative tightening, aka “balance sheet normalization” or “balance sheet runoff”), and speculation is growing that QT1 may get put on ice as the Fed approaches its apparent deemed ‘neutral balance sheet level’ (my term – borrowing from the neutral Fed funds interest rate level concept), or as Fed Chair Powell mentioned, the “normal balance sheet“.

Continue reading 9 Charts on Quantitative Tightening

Why No Fed Action is Needed for Lighter Quantitative Tightening in the Coming Months

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

Fed Shed: Balance Sheet Down $245 Billion Since September ’17

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.

Shedding Dog

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