The debate around the Federal Reserve's balance sheet is starting to pick up. The Fed wants to reduce the size of its balance sheet (which will drain excess reserves from the system), which reverses Quantitative Easing (QE). For simplicity, I will call this policy Quantitative Tightening (QT). If the policy is implemented on the basis that it is a substitute for rate hikes for a period of time, bond yields should be expected to fall. This will cause predictable consternation among some commentators.
