In the coming months, the full brunt of the Fed’s current QT program is set to be felt

 QT, letting Fed bond holdings mature without replacement, draining cash from the financial system.

“We didn’t see it coming,” Powell acknowledged referencing the sudden problems that emerged in 2019 and forced the central bank into steps it didn’t want. The advantage now is “we have experience,” he said.

The Fed is currently shedding its bond holdings at an annual pace of roughly $1 trillion

There are still more than $3.2 trillion of bank reserves parked at the Fed,

There’s another big element of liquidity on the Fed’s balance sheet — the reverse repo facility. Known as RRP, money-market funds have used it to park cash. And that account stands at more than $1.8 trillion.

Bloomberg 9 July 2023

https://www.bloomberg.com/news/articles/2023-07-09/fed-s-qt-ghosts-are-haunting-powell-bid-to-shrink-balance-sheet

Reality and markets rolled over them. 

They didn’t see the slowdown coming, and only after markets dropped 20% in December did they change their policy stance and have now cemented a dovish stance for years to come.

https://englundmacro.blogspot.com/2019/03/lets-be-very-clear-what-wednesdays-full.html