Institution: The Federal Reserve may announce the end of balance sheet reduction next week

Economists at the research firm Wrightson ICAP note that signs of funding pressure in the repo market could prompt the Federal Reserve to announce an end to its bond reduction plan at next week's interest rate decision. Fed Chairman Powell hinted in his speech earlier this month that he was awaiting the right time to end the balance sheet reduction, and last week's slight volatility in the repo market may serve as a key signal. The firm also expects the Fed to begin purchasing Treasury bonds to offset maturing mortgage bonds, thereby maintaining a stable overall balance sheet. Overall, as the Fed shifts to a neutral policy stance, the supply of short-term Treasury bonds in the market could decrease by approximately $20 billion per month. (Jinshi)