It’s Fed week. No chance of a direct rate cut, but the post-meeting commentary by Jerome Powell will be insightful as to what they’re collectively thinking about this month’s stabilized inflation data. We’ll also hear about their plan to continue to reduce the balance sheet, which swelled from $3.7 trillion to almost $9 trillion three years ago. Since then, the Federal Reserve has been letting almost $100 billion roll off the books each month as Notes have matured or otherwise been paid off. After the most recent meeting, the FOMC hinted that the attrition volume will be cut in half when they are ready to let long term rates drop. Lower supply means higher prices and lower interest rates. We’ll listen for more info about that plan on Wednesday.
