Dear Janet – About That Balance Sheet Normalization?
At the last FOMC meeting – on September 20th – Janet Yellen and her merry band of failed forecasters proclaimed that the Federal Reserve Balance Sheet would be allowed to normalize with reinvestments slowed or stopped in October.
There’s just one thing…
The Federal Reserve balance sheet has risen by over $5 billion in October – the biggest monthly rise since February.
Now, we are well aware of the lags in reporting data from SOMA but this is as of last Wednesday and so unless The Fed suddenly dumped over $5 billion in its balance sheet on Thursday and Friday, we suspect ‘normalization’ means something different to the PhDs at The Fed than it does to the avereage joe.