The Fed announced it would start to taper its asset purchases from $120 bn to $105 bn per month in December.
But the Fed balance sheet size increased by $140 bn in the first 23 days of December alone!
How is this possible?2/
— Alf (@MacroAlf) December 28, 2021
According to their tapering plan and given we were 3/4 through the whole December month when this update was released, the Fed should have added $78 bn in Treasuries + MBS.
Since Dec 1st, the Fed instead added $137 bn: why?
Two main reasons:
4/
— Alf (@MacroAlf) December 28, 2021
2) If you know you are facing redemptions over a very illiquid market period, you will be front-loading purchases before Dec 23 to make sure numbers square at year-end according to your $105 bn tapered QE schedule.
This is it, really. Nobody is ''lying''.
6/6
— Alf (@MacroAlf) December 28, 2021
US Home Price Gains Slowed For 3rd Straight Month In October https://t.co/TAWCZAjNmh
— zerohedge (@zerohedge) December 28, 2021