The nomination of Kevin Wash as Federal Reserve Chair has prompted a reevaluation of U.S. monetary policy expectations. According to NS3.AI, this development suggests a possible shift from the previous focus on balance sheet expansion. German Bank analyst Erik Liem noted that the market now anticipates the Federal Reserve might integrate balance sheet reduction with interest rate cuts.
Simultaneously, the U.S. Treasury's decision to maintain stable auction sizes is in line with market expectations, while still considering the possibility of increasing the issuance of various debt instruments.