The Fed’s Balance Sheet Reduction (QT) Update

The Fed reduced its Treasury holdings by $30.4 billion for the week-ended Wednesday December 6th. Meanwhile, the Fed’s Reverse Repo facility balance of $826 billion is 18% lower than the balance on November 7th. That is a steep 30-day decline. Will the Fed allow the balance to decline to zero before halting QT? Our guess is that the Fed will not allow the Reverse Repo facility to go to zero before halting QT. How low before the Fed acts is anyone’s guess.