The Fed’s balance sheet declined modestly ending the week at $8.91 trillion, down from $8.93 trillion and up from $8.76 trillion at the beginning of the calendar year and up from $4.17 trillion in January 2020 (just before the unprecedented fiscal and monetary stimulus programs of 2020 and 2021).

• As we wrote on Tuesday, the Fed has yet to materially reduce its balance sheet under QT.
• As QT ramps toward its $95 billion per month run rate ($60 billion U.S. Treasuries, $35 billion Government Agencies), the Fed will have pivoted from its role as the world’s largest buyer of Treasuries and Government Agency securities to the world’s largest seller. This will push bond yields up, bond prices down and risk asset valuations down.
• We believe the NASDAQ Composite will bottom around 9,000.
• See the Fed’s balance sheet data HERE.

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