Summary
- The departing Fed Chair was again silent on the balance sheet expansion (for a third consecutive press conference). Meanwhile, the Fed has added $170 billion worth of Treasuries since December.
- Conversely, Kevin Warsh, the incoming Chair, has said publicly the balance sheet needs to shrink.
- The playbook is deregulate the demand side for reserves, shrink the balance sheet passively, pair it with rate cuts. What does that mean for markets?
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Originally published on May 4, 2026
In my last note, we walked through Jerome Powell’s recent FOMC press conference.
The departing Fed Chair was again silent on the balance sheet expansion (for a third consecutive press conference). Meanwhile, they’ve added $170
