Post #2950

Federal Reserve has officially ended Quantitative Tightening after 3 years. The Fed has stopped shrinking its balance sheet. In total, they reduced $1.6T in Treasuries and $600B in MBS during QT. Now instead of cutting the balance sheet, the Fed will start buying T-bills to keep banking system reserves stable which basically means slow, stealth liquidity support. Now there are 2 important dates in December 9 Dec: FOMC Meeting Markets are pricing an 87% probability of a 25 bps rate cut. 18-19 Dec: BOJ MPM Bank of Japan may raise rates from 0.5% to 0.75%. This is huge because Japan is the world’s funding market and tightening here affects global liquidity flows.