US OUTLOOK/OPINION: QT End Dates Shift Back As Fed Goes "Slower For Longer"

We haven't seen many Fed rate view changes from analyst notes following the March FOMC - a few are highlighted below. Multiple analysts have reassessed their views when it comes to QT though, after the Fed slowed Treasury runoff to $5B/month from $25B prior (keeping MBS runoff unchanged at an effective $15B, so overall runoff is dropping to $20B from $40B prior) - per Chair Powell, "if you are cutting the pace of QT roughly in half, then the runway has probably doubled. So it's going to be slower for longer."

• Deutsche wasn't fully surprised by the QT taper, having expected a change of policy at this meeting, but thought that it "would be accompanied by forward guidance indicating a resumption of QT at the current caps once the debt limit is resolved and Fed liabilities normalize. Instead, Chair Powell indicated that QT will remain ongoing at the new slower pace." They continue to see runoff ending in Q1 2026. "We hope to learn more in the meeting minutes but for now our interpretation is that in their discussion the FOMC may have decided that the best way to address debt limit risks is to use repo operations to moderate the post-resolution decline in reserves – in-line with recent comments from Presidents Logan and Hammack – and that these can be decided on and announced later."
• BofA - which also had expected the Fed to shift balance sheet policy this week, but a pause rather than a taper - now sees QT ending in December 2025 (was September) "as slower QT implies a slightly longer runway. We expect the Fed ends QT after TGA is rebuilt and clearer funding pressures are evidenced....QT slowing should be supportive of money market stability & near-term front end spread widening."
• TD sticks to its September 2025 QT end-date. "Given our expectation that the debt ceiling X-date will be reached around August or possibly even September, the Fed can keep QT in place at the new, reduced pace for now. However, we expect the Fed to discontinue QT altogether at the September FOMC meeting as we believe QT will become inconsistent with the Fed's likely restart of rate cuts in H2. Nevertheless, there is a risk that with QT running at a very slow pace, the Fed could decide to keep QT in place for longer."
• Morgan Stanley also now expects balance sheet runoff to extend into 2026.
• Barclays sees QT concluding in June 2026 (was September 2025), per Bloomberg.
• Wrightson ICAP had accurately foreseen that if the Fed made a move, it would be to downshift Treasury runoff to $5B, but "we assumed that any such change would be a temporary expedient until debt ceiling uncertainties were resolved rather than a permanent shift." They note that "From a practical perspective, the most immediate consequence of the slowdown in Fed runoffs is that the Treasury will have to trim the supply of bills a little more until its debt limit constraints are resolved. If the Fed is letting fewer of its coupon holdings run off behind the scenes each month, the Treasury will have to pay down more bills in the weekly auctions in order to stay under the debt ceiling."