TS Lombard with the note.
The Fed learned in 2019 that there is a functional limit to how small the balance sheet can be. Too small is when available cash is insufficient to meet O/N financing for the securities market–the plumbing stops working.
What has gotten the FOMC to sit up now and take notice about the current QT is the return of month-end spikes in the repo rate for GC that are getting larger (Chart1).
