The Fed eased policy on Wednesday/Earnings rundown

The more I think about the Fed's decision to cut the Treasury portion of QT to essentially nothing, at $5b per month, down from $25b (and which was already calibrated lower), the more I'm convinced that this was a purposeful attempt of easing upward pressure on the long end of the yield curve and exactly what Scott Bessent wants. Powell told us not to take any signal from it, that it was due to issues with money markets. I say, there are no issues in money markets outside of expected quarterly transitions and it's clear that we should take a signal from it. Bottom line, I am sure (I'm just guessing here) that Powell and Bessent are in cahoots on this and I really can't wait for Governor Chris Waller to explain why he was against the move.

While their holdings of MBS will still roll off, in a glacial way, I bring this up because the Fed's balance sheet is still massive at $6.76 Trillion vs $4.16 Trillion in February 2020. That's a 63% increase and compares with nominal GDP that is up by 36% since Q4 2019 thru Q4 2024.

I thus agree with the WSJ editorial page which yesterday said in response to the QT decision, "Mr. Powell pitches this as a technical measure to buffer the balance sheet from political fighting over the debt ceiling this year, but in effect it's a monetary easing move."

On to the earnings call which are the most important thing to be digesting today because of the high profile nature of the companies reporting and the economic challenges that many discuss.

From FedEx: