TechFlow news, October 20 — According to Jinshi Data, economists at research firm Wrightson ICAP noted that signs of funding pressure emerging in the repo market may prompt the Federal Reserve to announce at its upcoming interest rate decision next week that it will halt further reduction of its bond holdings. Fed Chair Powell hinted earlier this month that the central bank is waiting for the right moment to end balance sheet normalization, and last week's slight volatility in the repo market could become a key signal. The firm also expects the Fed to start purchasing Treasury securities to offset maturing mortgage-backed securities, thereby maintaining the overall size of its balance sheet. In summary, as the Fed shifts toward a neutral policy stance, the monthly supply of short-term Treasury securities in the market may decrease by approximately $20 billion.
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