Definition
The reverse of QE (quantitative easing): the Fed shrinking the bonds it holds.
The story
The Fed usually doesn't sell its bonds outright. It just stops replacing some of them when they mature. It's quieter than a rate hike, but it slowly pulls money back out of the system.
Why markets watch it
It can nudge long-term rates higher in the background.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms