The Fed added about $300 billion to its balance sheet this past week.
https://void.cat/d/UDKNKEAwg1f4bWkWxZrdL5.webp
This wasn't from buying bonds or ending QT, but rather from making loans. To the extent that they continue QT, they will likely need to keep providing this type of liquidity, so it's like the Fed is taking liquidity out of the financial system with one hand and putting it back with the other. They've basically hit the liquidity floor of the banking system, which seems to be around $3 trillion in bank reserves.
However, that doesn't mean the balance sheet will go straight up. The Fed will try to limit the balance sheet growth to whatever extent is possible.
After the September 2019 repo spike, the balance sheet stopped decreasing and started going up, and then it began to stabilize sideways by January 2020. It then got slammed by the COVID-19 and lockdown impacts in March 2020, and the money printers went into hyperdrive due to that.
This time, without such a crazy catalyst, the balance sheet will likely spend more of its time in that intermediate state, similar to what it did in that September 2019 to January 2020 period.
In other words, this is still going to be a bumpy process.
