CITIC Securities: It is expected that the Fed's QT policy will reach a turning point by late next year.

On November 29th, Jin10 Data reported that according to CITIC Securities research, as the Federal Reserve heavily uses the reverse repurchase agreement tool (RRP), QE and QT begin to form close connections with the collateral market, affecting the term spread of US Treasury bonds. We believe that the significant increase in RRP that began in 2021 has pushed down the term spread and led to negative spreads. After RRP shrinks after 2023, it will narrow the inverted term spread and expand credit in the non-bank sector. We expect that the QT policy will reach a turning point by late next year, and the combination with the interest rate reduction policy will widen the term spread of US Treasury bonds, while the long-term central tendency of US Treasury bond interest rates may be difficult to decline.