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The Weekly Fix: Bond Bulls Run Head First Into Faster Fed Runoff

Jerome Powell, chairman of the U.S. Federal Reserve.

Jerome Powell, chairman of the U.S. Federal Reserve.

Photographer: Graeme Jennings/Washington Examiner.

The Federal Reserve’s interest rate plans have been under a powerful microscope over the past few months, which makes sense given the central bank’s aggressive campaign to hike borrowing costs. But the balance-sheet runoff has received relatively little attention.

That could change next month, when the Fed’s quantitative tightening is scheduled to kick into its highest gear. The runoff’s monthly cap will lift from $47.5 billion to a maximum pace of $95 billion, divided by up to $60 billion in Treasuries and $35 billion of mortgage securities.