This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.

January’s FOMC meeting minutes were released this week, providing plenty of fodder for monetary plumbing nerds to piece together what the Fed thinks about bank reserves and its ongoing campaign of quantitative tightening (QT).

As seen in the chart below, the QT campaign has been fraught with nuance and idiosyncratic offsetting. As QT occurred, the vast majority of it has been offset by the reverse repo facility (RRP) balance as seen by the white line below. 

Further, this has been hiccuped by the debt ceiling debacle of 2023 and the SVB banking crisis that led to the bank term…

Read more on Blockworks