The Federal Reserve may announce the end of balance sheet reduction next week, leading to a decrease in the supply of government bonds in the market

ChainCatcher news, according to Jinshi reports, economists at research institution Wrightson ICAP pointed out that signs of funding pressure in the repurchase market may prompt the Federal Reserve to announce next week that it will no longer continue to reduce its bond holdings in the interest rate decision. Federal Reserve Chairman Powell has hinted that he is waiting for the right time to end the balance sheet reduction, and it is expected that the Federal Reserve will begin purchasing U.S. Treasury bonds to offset maturing mortgage-backed securities, thereby maintaining a stable overall balance sheet size. As the Federal Reserve shifts to a neutral policy stance, the supply of short-term Treasury bonds in the market may decrease by about $20 billion per month.