Thornburg Investment Management Portfolio Manager Lon Erickson in Reuters

Analysis: Fed’s pivot raises investor question: When does QT start?

NEW YORK/CHICAGO, Dec 16 (Reuters) – Investors are asking a key question after the U.S. Federal Reserve accelerated its taper of bond purchases and unveiled more aggressive rate hike projections: When could the central bank eventually start to shrink its massive balance sheet?

Bond investors had largely absorbed the Fed’s pivot to a more inflation-hawkish stance. The move to a faster reduction in new bond purchases from $120 billion a month to zero had been well telegraphed, as had the new forecasts from policymakers that have now convinced the market that the first interest rate increase will arrive no later than May, with more to follow by year end.

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