Fed: Runoff in the balance - TDS

Michael Hanson, head of global macro strategy at TD Securities, points out that equity and FX markets reacted sharply to news reports suggesting that the Fed would conclude its runoff policy much sooner than expected.

Key Quotes

“We think the market reaction may have been premature: these reports did not contain any new information about Fed views, and a concrete "roadmap" for the balance sheet from Fed officials at the January FOMC meeting strikes us as unlikely.”

“Our expectation is for the runoff program to conclude by October of this year. Previously, Fed Chair Powell suggested a much longer and bigger decline. At the post-FOMC press conference in January, Powell may hint only vaguely at a larger equilibrium level for bank reserves and the balance sheet.”