Odd Lots

Transcript: Matt King Sees a $1 Trillion Liquidity Drain Coming to Markets

What happens when it gets withdrawn?

Jerome Powell, chairman of the US Federal Reserve, exits following a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, March 22, 2023. The Federal Reserve raised interest rates by a quarter percentage point and signaled it's not finished hiking, despite the risk of exacerbating a bank crisis that's roiled global markets.Photographer: Al Drago/Bloomberg

Provide news feedback or report an error

Confidential tip?

Send a tip to our reporters

Site feedback:

Take our Survey

By Joe Weisenthal and Tracy Alloway

March 30, 2023 at 9:04 PM UTC

This article is for subscribers only.

In early March, we interviewed Citi strategist Matt King on the role of central bank balance sheet activity in driving markets. His contention then was that, contrary to popular belief, balance sheets were expanding, and that we were already seeing monetary easing, causing markets to be “in thrall” to their activity. Since the recording, of course, we saw the blowup of Silicon Valley Bank, a significant expansion of the Fed's balance sheet, and (perhaps surprisingly) a rally in the stock market. In addition to the normal conversation, Matt brought along with him a bunch of charts, that you can see here, or by watching a video of the episode here on YouTube. The transcript has been lightly edited for clarity.