The Fed’s Balance Sheet Reduction (QT) Update

Core inflation at 3.2% is right where the Fed wants it in order to inflate the debt away. Fed Funds will come down next week. QT has stopped as the Fed increased its holdings by $75 million this week. Powell needs to pare the Fed’s balance sheet while he lowers rates, not grow it. Otherwise, the Fed’s expansionary policy will further devalue the Dollar by way of growing the money supply. Money supply growth unrelated to productivity growth can only result in Dollar devaluation.

• Treasuries: The Fed’s Treasury security holdings increased by $75 million for the week-ended September 11th. The Fed’s Treasury holdings declined by $25 billion on a rolling 4-week basis.

• Agencies: The Fed’s Government Agency security holdings were unchanged for the week-ended September 11th and declined by $18 billion on a rolling 4-week basis.

• The Fed’s balance sheet holdings: https://www.newyorkfed.org/markets/soma-holdings