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As Fed’s QE Era Ends, a New Trillion-Dollar Bond Dilemma Emerges

  • Size of Fed’s balance sheet is ‘trivial’ vis-à-vis composition
  • Outright MBS sales, open-market bill purchases seen as options
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More than a decade after it all began, the Federal Reserve is finally nearing the end of its grand experiment in monetary policy.

The Fed, which has been paring its crisis-era debt holdings, may lay out plans to end the program at its meeting next week. Yet in the Treasury market, the close of the quantitative-easing era could open another can of worms.