FED: Primary Dealers Eye QT Ending June, But Timeline Slipping (2/2)

The latest NY Fed survey of primary dealers (December, released mid-Jan) shows a similar range to QT end-dates as sell-side analysts.

• The median dealer expectation for QT to end is June 2025, with the 25th percentile respondent seeing April and the 75th percentile seeing August.
• Dealers appear unanimous about the SOMA portfolio falling to $6.375T at the end of QT (vs $6.4T now) - at a runoff pace of $30B/monthly at present, that implies the figure will be hit relatively soon, though reserves are seen roughly between $2.9T and $3.2T at end-QT  (vs $3.3T now) and have stabilized above $3.2T over the last several months.
• These expectations are roughly similar to the prior survey (Nov) in terms of SOMA / reserves size at the time of QT ending, but the dates are getting slowly pushed back (the prior survey had a June median, but an Apr-Aug central range). That's similar to sell-side analyst expectations which as recently as October 2024 overwhelmingly saw March 2025 as the end-date.
• The likelihood that Treasury will burn through the $800B cash in the TGA account amid debt ceiling management will keep reserves underpinned for the coming couple of quarters at least (which appears not to have been factored into the primary dealer survey responses which were submitted in December and showed little TGA decline in the median).
• For now, we will wait to hear more about reserve management from Fed officials, but as Powell noted this week, there doesn't appear to be evidence that reserves are anything but "abundant".
• The FOMC meeting minutes out in three weeks may have some more detail on any discussions, but it looks as though the mid-March meeting will be the next logical opportunity for the Committee to discuss balance sheet policy.
• In the meantime we will continue to watch various indicators including the NY Fed's reserve elasticity metric to identify signals that the reserves regime is moving from "abundant" into “ample” territory.