Fed's Big Balance Sheet Wind-Down May Be Halfway Complete

(Bloomberg) -- The Federal Reserve has been winding down its balance sheet, draining reserves from the banking system in the process, for a little over a year. At the same time, Wall Street has been revising up its estimates for the ultimate amount of reserves that will be left in the system, according to results of the New York Fed’s surveys of primary dealers and investment firms. Expectations have changed over the last year in part due to the results of another recent Fed survey of banks about their needs, according to Blake Gwinn, an interest-rate strategist at NatWest Markets and former New York Fed analyst. Fed Chairman Jerome Powell may give an update on the process Wednesday during his 2:30 p.m. press conference in Washington.

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