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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FED
Wells Fargo expects a third 25bp hike at September 2022's FOMC meeting, alongside an announcement that the Fed will begin running off its balance sheet in October.
- This will take the form of a passive runoff with securities maturing up to a monthly cap: initially $25B ($20B Tsy, $5B MBS), increasing by $10B Tsy/$5B MBS per month from Nov 2022 through Mar 2023 to a terminal monthly cap of $100B ($70B Tsy / $30B MBS).
- This is on the hawkish end of expectations and would be double the previous cycle's terminal runoff pace of $50B, but Wells Fargo notes that when scaled to the Fed's asset growth, roughly equivalent.
- This pace would bring the Fed balance sheet from ~$9T to a little below $7T by end-2024, or around 24.4% GDP - which Wells Fargo says represents the same level as in mid-2015.
- "We think the most likely outcome is for upward pressure on long-term Treasury yields, but only moderately so", pencilling in an end-2023 10Y Tsy yield of 2.35%.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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