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Wells Fargo: Fed’s balance sheet to start growing organically again

Wells Fargo analysts suggest that US Fed’s shrinkage of balance sheet will likely stop by the end of 2019 at a terminal size of roughly $3.6tri, with about $1.1tri in excess reserves.

Key Quotes

“Starting next year, we expect balance sheet to start growing organically again, eventually reaching $5tri in 2029.”

“In terms of composition, we expect Fed’s holdings of Treasuries to rise roughly $175 billion in 2020 and $280 billion in 2021, with T-bills comprising about $50 billion and $80 billion of those totals, respectively.”

Gold corrects farther from 10-month tops, slides to session lows near $1335 level

   •  The latest FOMC meeting minutes provided a lift to the USD and prompts some profit-taking.    •  Uncertainty over US-China trade talks underpins
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USD/JPY: Negative downside risks are increasing - Commerzbank

According to Karen Jones, analyst at Commerzbank, USD/JPY is being drawn ever closer to much tougher resistance offered by the 200 day ma and the Octo
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