The chatter around Fed resuming QT is heating up.
And this is due to obvious reasons.
First of all, bond yields are moving higher despite rate cuts.
This is a sign that the market believes Fed can't control inflation.
Additionally, Labor market and consumer sentiment is at its worst level since 2020 pandemic.
This is another sign that the Fed has tightened too much.
The only way now is to add some reserves to control the rising bond yields.
This is why the market expects $40B-$45B in bond buying per month from Jan 2026.
If bond yields are still not in control, the Fed will have to ramp up QE.
And this is due to obvious reasons.
First of all, bond yields are moving higher despite rate cuts.
This is a sign that the market believes Fed can't control inflation.
Additionally, Labor market and consumer sentiment is at its worst level since 2020 pandemic.
This is another sign that the Fed has tightened too much.
The only way now is to add some reserves to control the rising bond yields.
This is why the market expects $40B-$45B in bond buying per month from Jan 2026.
If bond yields are still not in control, the Fed will have to ramp up QE.















