Fed balance sheet shrinks by $1tn

 By removing one of the largest buyers from government bond markets, the Fed’s balance sheet reduction — known as quantitative tightening — adds to the supply of debt that private investors have to absorb.

 For the central bank, quantitative tightening can be a precarious path. It was forced to end its previous attempt in 2019 after the balance sheet unwinding contributed to a sharp spike in borrowing costs that spooked markets.

Financial Times 11 August 2023

https://www.ft.com/content/62451148-cad1-4caa-bac6-7d78648889d6