Is the Fed Getting Cold Feet about the QE Unwind?

Curious things are happening on its balance sheet. The last Fed meeting ended on September 20 with a momentous announcement, confirming what had been telegraphed for months: the QE unwind would begin October 1.
The unwind would proceed at the pace announced at its June 14 meeting. It would shrink the Fed’s balance sheet – ‘balance sheet normalization’ it calls that – and undo what serial bouts of QE have done: gradually destroying some of the money that had been created out of nothing during QE.
The pace of the shrinkage would be $10 billion a month for the first three months, and then it would accelerate every three months until it hits $50 billion a month at this time next year. That was the announcement.
Reality Check Thursday afternoon, the Fed released its weekly balance sheet for the week ending October 18. We’re now two and half weeks and three weekly balance-sheet releases into the QE unwind period. How much has the Fed actually reduced its balances sheet?
Total assets on Oct 4: $4.460 trillion Total assets on Oct 11: $4.459 trillion Total assets on Oct 18: $4.470 trillion You read correctly: Since October 4, the balance sheet gained $10 billion, all of it in the week ending October 18.

This post was published at Wolf Street on Oct 20, 2017.