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Fed Balance Sheet Semi Tight as Treasury Pulls Cash From Markets

With Treasury paydowns ending that week, and the Treasury returning to the market to claw back big chunks of the cash it had injected into dealer and other accounts over the past couple of months, next week’s Fed H41 data should start to reflect that. The Treasury account balance should grow, and bank reserve accounts should shrink a bit. These will have no effect on the Fed’s total balance sheet size, but would represent a withdrawal of cash from the markets. Here’s what it means.

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