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Brainard Rows Back On Potential QT Start

FED
  • "We'll decide as soon as May to start reducing the size of the balance sheet in which case those reductions could come as soon as June".
  • Her comments from Apr 4: *BRAINARD: FED TO SHRINK BAL. SHEET AT RAPID PACE AS SOON AS MAY - bbg
  • Technically still consistent with the section from the FOMC minutes published Apr 6: “All participants agreed that elevated inflation and tight labor market conditions warranted commencement of balance sheet runoff at a coming meeting, with a faster pace of decline in securities holdings than over the 2017–19 period.”
  • Hikes implied by Fed Funds futures slip to 207bps to year-end. Tsy curve moving steeper with 2s10s at 30bbps, 5s30s at 14bps.

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