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Fed: QT set to begin in October but no balance sheet level target yet – Danske Bank

Fed: QT set to begin in October but no balance sheet level target yet – Danske Bank Skip to main content Follow us on: | FXStreet Blog |    Newsletter MENU Show navigation FXStreet FXStreet - The forex market Home RATES & CHARTS TOOLS Live Chart Trading Positions Forecast Poll Rates Table Technical Confluences ASSETS EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD USD/CAD GBP/JPY EUR/JPY Dollar Index Gold Oil SP500 News LATEST FOREX NEWS Latest News Institutional Research LATEST NEWS BY ASSETS EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD USD/CAD USD/CHF EUR/GBP Dollar Index Commodities Bonds Equities Analysis EDITORIAL SELECTION EUR/USD GBP/USD USD/JPY AUD/USD USD/CAD Dollar Index Oil Gold Stocks Commodities Bonds Correlations Support and Resistance Elliott Wave Cycles Sentiment Economic Calendar TOOLS Economic Calendar Interest Rates Market Hours TOP EVENTS Nonfarm Payrolls Fed BoC ECB BoE SNB BoJ RBA RBNZ Live Video SECTIONS Shows Schedule Become Premium MOST POPULAR COACHES Ed Ponsi Giuseppe Basile Sarid Harper Alex Ong Sam Seiden Steve Ruffley Rob Colville Nenad Kerkez Gonçalo Moreira Navin Prithyani David Pegler Walter Peters Education Brokers SECTIONS Forex Brokers Broker News Broker Spreads Home RATES & CHARTS TOOLS Live Chart Trading Positions Forecast Poll Rates Table Technical Confluences ASSETS EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD USD/CAD GBP/JPY EUR/JPY Dollar Index Gold Oil SP500 News LATEST FOREX NEWS Latest News Institutional Research LATEST NEWS BY ASSETS EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD USD/CAD USD/CHF EUR/GBP Dollar Index Commodities Bonds Equities Analysis EDITORIAL SELECTION EUR/USD GBP/USD USD/JPY AUD/USD USD/CAD Dollar Index Oil Gold Stocks Commodities Bonds Correlations Support and Resistance Elliott Wave Cycles Sentiment Economic Calendar TOOLS Economic Calendar Interest Rates Market Hours TOP EVENTS Nonfarm Payrolls Fed BoC ECB BoE SNB BoJ RBA RBNZ Live Video SECTIONS Shows Schedule Become Premium MOST POPULAR COACHES Ed Ponsi Giuseppe Basile Sarid Harper Alex Ong Sam Seiden Steve Ruffley Rob Colville Nenad Kerkez Gonçalo Moreira Navin Prithyani David Pegler Walter Peters Education Brokers SECTIONS Forex Brokers Broker News Broker Spreads ; NEWS | 11 minutes ago Fed: QT set to begin in October but no balance sheet level target yet – Danske Bank By Sandeep Kanihama Analysts at Danske Bank suggests that in the latest FOMC meet, on the balance sheet, most was in line with expectations: This means that caps for Treasuries will begin at USD6bn per month and increase by USD6bn at three-month intervals until it reaches USD30bn per month and the caps for mortgage-backed securities will be set at USD4bn per month initially and increase USD4bn at three-month intervals until it reaches USD20bn per month. Key Quotes “Given the outlined cap-structure, Fed will still be a fairly active buyer of Treasuries likely reinvesting around USD200bn in Treasuries during 2018 (versus USD216bn last year and USD176bn projected this year).” “However, we were a bit surprised that the Fed did not announce how much it wants to lower its balance sheet (or alternatively, for how long it wants to continue QT). It seems like the Fed wants to keep flexibility to adjust along the way if necessary, perhaps because the Fed is still concerned about a repetition of something like the taper tantrum in 2013. We still think that it is not a trivial question how much the Fed can lower the balance sheet due to increasing regulation, something the Fed has also touched upon previously. In the addendum from June, however, it is mentioned that the level of the quantity of reserve balances was also mentioned as it ‘will reflect the banking system's demand for reserve balances and the Committee's decisions about how to implement monetary policy most efficiently and effectively in the future. The Committee expects to learn more about the underlying demand for reserves during the process of balance sheet normalization’.” Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. 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