The market has rallied since Jerome Powell backtracked on the balance sheet in January, saying the Fed "wouldn’t hesitate to make a change” if the Fed concluded the balance sheet” was part of the problem”. Yesterday’s minutes of the January meeting didn’t disappoint in the sense that the Fed hinted an end to QT later in 2019. It is, though, not as if the Fed will end QT because it thinks it is “part of the problem” for markets. The end to QT later this year should merely be seen as a technical thing. As the amount of currency in circulation in the economy and the reserve requirements continue to rise, the amount of ... (full story)