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Key macro events this week

PublicationMacro economy

1 August 2018, 2:00 am

1 minute read

Key Indicators.pdf104 KB

Wilma Schelvis

Wilma Schelvis

Research Assistant

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Kevin Warsh’s Reverse Operation Twist

Macro economy

YesterdayRogier QuaedvliegNick Kounis(+1)

The Trump administration would like to see long-term interest going down yet oddly Warsh’s vision of the Fed appears to imply the opposite. There is a trinity of steepening policies, though in this note we focus on his policy to rein in the footprint of the central bank’s balance sheet. Shrinking the balance sheet would need the Fed to go back to a scarce reserves policy, which would make it more difficult to set interest rates. More likely is for it to reduce the skew of its Treasury holdings towards longer-term securities to market-neutral in a Reverse Operation Twist. The Fed’s Operation Twist in 2011-2012 flattened the curve and lowered the term premium and this would likely have the opposite impact. The US Treasury could alter its issuance policy, in effect conducting its own Operation Twist as part of a 2026 Fed-Treasury accord. The rising funding needs of the US government could still make these shifts challenging, meaning they are more likely to be gradual.

Key Macro Events 16 – 21 February 2026

Macro economy

13/02/2026Rogier QuaedvliegBill DivineyArjen van Dijkhuizen(+2)

These are the Key Macro Events for the upcoming week.

Wilma Schelvis

Research Assistant

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