The Quantitative Easing (QE), is coming to an end tonight. A generation (or 2) of investors don’t know the markets without QE. Not only FED is going to raise rates, but it is going to start the QT, that is it is going to either run-off or buy back the money they pumped in to the system.
May be FED will not go through but fasten your belts.
You just figuring this out?
BTW…they MAY only slow down the money printing growth not stop it.
they MAY only slow down the money printing growth not stop it.
We don’t know what they will do in future, but the announced plan calls for start with rate hikes, running down mortgages assets (MBS), and eventually some treasuries running down (i.e, FED will not roll over maturing securities).
This calls for a robust $700 B QT annually. Most people are not believing FED. Why, I don’t know. But even yesterday FED Chair in congressional testimony talked pretty hawkish on “inflation”. So they were behind the curve and now they will go overboard and overcompensate. Nutshell, FED will behave like typical investor, market.
https://fred.stlouisfed.org/series/TOTRESNS
Technically, reserves have declined some since December 2021.
Moreover, reserves were generally declining from 2014 thru 2019.
So, QT isn’t exactly new, but I do appreciate the concern.
It’s a huge shift.
maybe this is the series; it’s at $8B right now
https://fred.stlouisfed.org/series/WALCL
There is not as much tightening with this series, but there was a reduction starting between March 2018 thru August 2019.