as the "takeoff" of ultra-short-end rates begins, a "landing" likely in the form of QT ending will follow, just as the Fed unofficially sets in motion the shift to its new (secured) target rate
You seem to have a high confidence in the Fed ending QT - but wasn't the whole point of slowing Treasury runoff to avoid this?
Also, how does your outlook fit in with the Fed's (stated) desire to shift its balance sheet away from coupons and MBS and into bills? Could MBS runoff continue even if they halt Tsy runoff?
NB: not a solicitation for financial advice, of course.
Conks,
You seem to have a high confidence in the Fed ending QT - but wasn't the whole point of slowing Treasury runoff to avoid this?
Also, how does your outlook fit in with the Fed's (stated) desire to shift its balance sheet away from coupons and MBS and into bills? Could MBS runoff continue even if they halt Tsy runoff?
NB: not a solicitation for financial advice, of course.
You seem to have a high confidence in the Fed ending QT - but wasn't the whole point of slowing Treasury runoff to avoid this?
high confidence around year-end but not now
they can't keep shrinking the balance sheet forever
Could MBS runoff continue even if they halt Tsy runoff?
yes, this is being recommended by many analysts. running off most excess MBS purchases is a must
see the Great Rebalancing post but i'm doing another piece on this
Epitome:
"Oh what a tangled web we weave when first we practice to deceive."
Sir Walter Scott
🤭