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2025-10-28 13:48:04
[The Fed's balance sheet reduction is nearing its end, with signs of stress in the money market.] 1. The Federal Reserve is expected to end its three-year quantitative tightening phase this week, easing pressure on banks amid concerns about excessive money market liquidity. Earlier this month, some bank lenders tapped the Federal Reserve's backup financing facility, reaching levels seen during the pandemic. Policymakers will discuss this on Tuesday. Since launching its quantitative tightening program in June 2022, the Fed has allowed over $2 trillion in Treasury bonds and mortgage-backed securities to roll off its balance sheet, tightening financing conditions. 2. Krishna Guha, Vice President at Evercore ISI, stated, "There is a near-market consensus that the Fed will end quantitative tightening this month." 3. Richard Clarida, former Vice Chairman of the Federal Reserve and current director of Pacific Investment Management Company (PIMCO), noted, "This will be a close call. But even without a formal resolution, we will have a strong signal that the Fed will end quantitative tightening in December."
