The Fed's QT since 2022 sucked cash reserves out of small banks more quickly than large banks this time.
Small banks are already back at cash ratios they reached during the 2019 repo spike, while large banks aren't yet.
Small banks are already back at cash ratios they reached during the 2019 repo spike, while large banks aren't yet.
I think the Fed is close to being done QT.
That doesn't mean rate cuts or anything like that, but it seems like the balance sheet drawdown is likely to end prior to rate cuts being initiated.
That doesn't mean rate cuts or anything like that, but it seems like the balance sheet drawdown is likely to end prior to rate cuts being initiated.
If there's a rapid drawdown in the TGA then that could give the Fed a few more months of QT runway.
But in terms of total liquidity, it seems hard to pull much more out than these levels.
But in terms of total liquidity, it seems hard to pull much more out than these levels.
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