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by u/chart_chai_th·20dDiscussion

Fed's QT Program - Is the Market Underpricing Its Impact on Liquidity?

Been watching the Fed's balance sheet closely. They're still running off at a clip of $95B/month, which is a significant drain on banking reserves. With the TGA also being refilled, I'm concerned the market isn't fully pricing in the liquidity crunch this could create in Q4, especially if economic data starts to wobble. Could this be the catalyst for a deeper equity correction? $SPX $NDX

4 comments · 122 points

4 Comments

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u/swing_samir·17d

Good point. The reverse repo facility is still elevated, suggesting there's plenty of cash, but that doesn't mean it's in the right places for market functioning.

14
u/pip_hunter_ola·20d

Definitely a headwind. Combined with higher real rates, I think equities are due for a re-evaluation.

12
u/chart_chai_th·18d

I'm seeing some pressure in the funding markets, but nothing that signals systemic risk yet. Keep an eye on overnight rates.

7
u/daytrade_deniz·20d

Agreed. Everyone's focused on interest rates, but QT is the silent killer here. Expecting higher volatility.

2

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