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MNI PODCAST: FedSpeak - RRP Drop Creates Headroom for Fed QT

(MNI) WASHINGTON

EXECUTIVE SUMMARY

  • Joseph Wang, proprietor of research blog fedguy.com and former trader on the New York Fed's open markets desk, says earlier market fears that illiquidity would force an early end to QT have been allayed following an uneventful rebuild of the Treasury's cash account after the debt ceiling resolution.
  • With excess reserves of USD2 trillion, if one counts both bank reserves and cash parked at the reverse repo facility, QT could potentially continue for at least two more years.
  • Conventional belief would expect QT to end when rate cuts begin, but the Fed may be inclined to continue running off its balance sheet this time.
  • Listen to the podcast here.
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com
MNI Washington Bureau | +1 202-371-2121 | jean.yung@marketnews.com

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