Mind The QT Autopilot—January Could Get Clobbered

Nomura’s Charlie McElligott reminds us of his October call anticipating a “financial conditions tightening tantrum” which was based-upon the enormous “global QT impulse” that month, for one simple reason: January 2019 should see similar “tightening” as the Fed’s balance-sheet run-off continues (including two heavy weekly QT periods during the first- and third- weeks of January). And that’s not all: in a world of fungible global liquidity, January will be hit with the double whammy of it being the first month following the cessation of the ECB’s bond-buying program.