The Fed’s ‘Great Unwind’ Will Likely Lag Due to Payment Uncertainties, Aspects of the TBA Market
January 19, 2018
The plan of the Federal Reserve’s Open Market Committee to shrink the U.S. central bank’s huge balance sheet probably will unfold with a bit of a lag because of the uncertainty surrounding principal payments and the forward-settling nature of the to-be-announced MBS market, according to economists at the Federal Reserve Bank of New York.