Tapering IS Quantitative Tightening
America, China, and the Death of the International Monetary Non-System - American Affairs Journal
Russell Napieramericanaffairsjournal.org
Notably, Stephen Miran and Nouriel Roubini recently published a paper about “Activist Treasury Issuance” which is their term that refers to the Treasury Department taking unusual actions to offset the Fed’s tightness. Both Miran and Roubini are economics PhDs and worked in various capacities with the Treasury Department in the past.
In the paper, th
... See moreLyn Alden • Potential Asset Rotations: Deep Dive Analysis
The reverse repo facility has been flat lately, and there’s still $433 billion in it. The big draining of the reverse repo facility from over $2 trillion in May 2023 to the current low levels was the main reason why the Fed was able to keep performing quantitative tightening without causing further liquidity problems in the banking system.
Lyn Alden • Deep Dive: Emerging Markets
Transition to QT Framework: QT is about reversing QE’s excesses and restoring balance-sheet normalcy.
QT 1.0 mostly let the portfolio “run off” (without reinvestment) but was muted by Treasury issuance patterns.
QT 2.0 takes a more active role—it seeks not only to shrink the balance sheet but also to alter its composition by favoring short-term reinv