Fed QT Gets Room to Run Longer as Funding-Market Pressures Abate
- Decline in leveraged funds’ positions suggests less repo need
- Lower funding needs could keep cash at reverse repo facility
The Marriner S. Eccles Federal Reserve building in Washington, DC.
Photographer: Samuel Corum/BloombergThis article is for subscribers only.
The stability in overnight funding markets this year has strategists suggesting that the Federal Reserve will be able to continue letting its balance sheet run down.
Since the beginning of the year, demand for leverage, or borrowing, in the funding market has faded as a result of stronger-than-expected economic data and more hawkish Fed officials insisting that the central bank is on track to cut interest rates, just not anytime soon.