It appears the Fed's balance sheet "trial balloons" using primary dealers as intermediaries have begun.
After yesterday's unexpectedly explicit guidance on the future of the Fed's balance sheet, which prompted Goldman, Citi, and various other banks to suggest they may bring forward their estimates for when the Fed will announce the start of "renormalization", moments ago JPM's Michael Feroli, traditionally the analysts "closest" to the Fed, did just that when he issued a report stating that that there is now "chance of a September start" to renormalization, with the values for monthly roll-off caps and phase-in period to be "revealed at the June FOMC meeting."Earlier:
According to Feroli, JPM continues to look for normalization to commence at the December FOMC meeting but "there is some chance of a September start, though this would not have a material difference for our projections on a multi-year horizon. At the meeting at which normalization starts we expect the Committee to announce a set of monthly roll-off caps for the following year, which increase regularly every three months.
And here are the finer details which the Fed may or may not have leaked to select banks, in an attempt to prepare for what is coming, and talking down the equity bubble....MUCH MORE"Our best guess is that the initial caps are $4 billion a month for MBS and $8 billion a month for US Treasuries. In the preannounced schedule, these caps would be augmented each quarter by $4 billion and $8 billion, respectively, until at the end of the year they are $16 billion and $32 billion. Consistent with yesterday’s minutes, even after the normalization process is fully phased in the monthly caps will still be in place, though in most months after the full phase-in they would cease to bind."
Shrinking The Federal Reserve's Balance Sheet