The prediction market on Polymarket indicates a 100% probability of the Federal Reserve ending Quantitative Tightening (QT) early.
Polymarket Data Reflects Major Sentiment Shift
Market predictions show a strong expectation for the Fed to halt QT before May. After volatility from March 5 to 9, the probability spiked around March 11. By March 13, the probability exceeded 60%, surging past 80% by March 15, and stabilized at 100%, indicating a strong consensus among traders. Polymarket’s total trading volume on this event has reached $6.25 million, highlighting market interest.
Wall Street Eyes Possible QT Slowdown
Wall Street analysts and major financial institutions are closely monitoring the Fed's actions. Some banks predict a slowdown in Treasury bond runoff to avoid complications in May and June. Bank of America forecasts a QT pause due to trade policy uncertainty. Goldman Sachs expects a temporary QT pause in April, resuming after debt ceiling stabilization, while TD Securities doesn't foresee significant changes.
Current Uncertainty and Treasury Impact
The uncertainty arises from the Treasury's cash management efforts, which aim to reduce its Fed balance. Once the debt ceiling is raised, the Treasury will rebuild its account, removing liquidity again, complicating QT impact assessment.
The strong rise in the probability of an early QT end reflects investor expectations on future Fed decisions and their potential impact on financial markets.
