Mr Powell and his colleagues have spent the past year steadily shrinking

 the Fed’s huge stock of Treasuries and mortgage-backed securities (mbs), 

the face value of which has fallen from $8.5trn to $7.7trn. 

Each month the Fed allows up to $60bn-worth of Treasuries, and $35bn of mbs, to mature without reinvesting the proceeds. 

Now it must decide when to stop.

The return of high inflation makes qe’s reversal (quantitative tightening, or qt) desirable

The more troubling reason is that, just like raising short-term rates, qt can inflict its own damage. Having been tried only once before, from 2017 to 2019 and at a much slower pace, its side-effects are poorly understood. 

That does not make them less dangerous. 

By sucking cash out of the system, the previous bout of qt prompted a near-failure of the money markets

America’s Treasury, meanwhile, is set to soak up yet more liquidity. It must sell more than $1trn of debt over the coming three months to rebuild its cash buffers 

The Economist 15 June 2023

https://www.economist.com/finance-and-economics/2023/06/15/the-fed-must-soon-decide-when-to-stop-shrinking-its-balance-sheet

Treasury needs to raise more than $1 trillion in auctions over the next few months.

Andy Kessler WSJ 11 June  2023

https://englundmacro.blogspot.com/2023/06/treasury-needs-to-raise-more-than-1.html