Anticipating policy change really isn't necessary. Market actors don't discount the future very well, if at all. The market responds to actual, not anticipated changes in liquidity. We can usually wait for the policy announcement to be sure. The markets can't sustain a reversal until the money is there. In other words, money talks!


Massive Treasury supply will put downward pressure on the prices of all financial assets, not just Treasuries. Under QE, the Fed was funding all new Treasury supply. Under QT (Quantitative Tightening) it is actually adding to supply at the same time as it is pulling money out of the banking system. It's very bearish.

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