What follows from the Fed’s balance sheet normalization?

Fed’s balance sheet normalization could shrink the balance sheet by one third, or USD 1.3 trillion by mid-2020. Long-term Treasury yields are likely to rise by around 34–63 basis points as a result.

This follows from a rough estimate obtained by looking at the estimated effects of different QE programs implemented between 2009 and 2014 by the Fed.

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