Liquidity crunch eases hopes for Fed to end quantitative tightening – Big Bet Ahead of Fed’s QT Decision – News Air Insight

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During QT, when Treasuries mature, the Fed does not reinvest the proceeds, leading to a reduction in reserves and higher repo rates. If QT ends, the decline in reserves halts and liquidity starts improving, pushing repo rates lower. This reversal is key to understanding why traders expect funding conditions to ease post-QT.



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