ChainCatcher news, according to Jinshi reports, strategists including Teresa Ho from JPMorgan expect that, given the liquidity situation has returned to normal after the end of October, the Federal Reserve will end quantitative tightening (QT, i.e., balance sheet reduction) in the first quarter of 2025, earlier than the previously expected completion by the end of 2024.The supply of U.S. Treasury bills and repos has both increased, and money market funds are seeking to extend to longer maturities as expectations for easing diminish, drawing more funds from the Federal Reserve's overnight reverse repurchase facility.

ChainCatcher news, several of Wall Street's largest banks expect the Federal Reserve to end its balance sheet reduction process in April next year, which is consistent with their expectations for the Fed in July.A survey conducted by the New York Fed before last month's Federal Reserve interest rate meeting among so-called primary market dealers showed that "most dealers indicated that they expect the end of balance sheet reduction to depend on the level of reserves, overnight reverse repo conditions, or the assessment of upward pressure on money market rates relative to the administered rates."Some dealers stated that macroeconomic factors pose risks to the outlook for ending the balance sheet reduction. "The current size of the Federal Reserve's balance sheet is approximately $7 trillion."

ChainCatcher message, Bank of America strategists Mark Cabana and Katie Craig stated in a report that the bank now expects the Federal Reserve to end its balance sheet reduction by the end of March 2025, compared to the previous forecast of December 2024, due to the lack of discussion among policymakers regarding its policy. The September FOMC meeting indicated that the Federal Reserve believes changes in policy rates and the balance sheet are independent of each other.

ChainCatcher news, according to a report by Wall Street News, the minutes from the Federal Reserve's March monetary policy meeting show that the participating Fed officials generally believe that recent data has not strengthened their confidence in inflation falling to target, and inflation is expected to decline along a generally uneven path; participants mentioned that geopolitical risks could push up inflation, and the U.S. commercial real estate market may pose economic downside risks; the vast majority of participants believe that starting to slow down the balance sheet reduction "soon" is a prudent move; participants believe that slowing down the balance sheet reduction does not mean a decrease in the final reduction amount and will not affect the monetary policy stance; all agreed to reduce the monthly balance sheet reduction scale by about half, with the MBS reduction cap unchanged and the U.S. Treasury reduction cap lowered. The "New Federal Reserve News Agency" stated that the Federal Reserve is prepared to "soon" slow down the balance sheet reduction, and the monthly U.S. Treasury reduction scale may decrease.In addition, according to Jiemian News, U.S. President Biden stated during a joint press conference with Japanese Prime Minister Fumio Kishida at the White House on April 10 local time that he stands by his prediction of interest rate cuts, which may be delayed by a month, with one rate cut expected before the end of the year.

According to ChainCatcher news, based on official data from the Federal Reserve, since the Federal Reserve's balance sheet peaked at $8.965 trillion in April of this year, it has achieved a reduction of over $206.434 billion, bringing it down to $8.759 trillion, a decrease of 2.3% (data as of October 4). (Source link)