Powell Signals the End of QT — Relief Rally or the Calm Before?

First, let’s look at the key points from Powell’s remarks at the 67th Annual Meeting of the National Association for Business Economics (NABE):

* The future path of monetary policy will depend on the assessment of data and risks.
* The balance sheet remains a vital tool of monetary policy.
* Fed officials will discuss the composition of the balance sheet.
* Balance sheet reduction (QT) could come to an end in the coming months.
* Inflation remains on an upward trajectory.
* The labor market shows signs of notable downside risks.

From this set of statements, my conclusion is that if the Fed and Powell start speaking more decisively about ending QT and halting balance sheet reduction, it would be highly significant.
It would indicate that the Fed is becoming increasingly concerned about the future of the labor market — and likely signals more aggressive and deeper rate cuts ahead.

Halting the balance sheet reduction while simultaneously cutting rates could provide some support to the U.S. economy and ease pressure on equities and financial markets.
However, if QT is paused but unemployment continues to rise, we should expect a sharp downturn in financial and equity markets.

Overall, given Powell’s dovish tone, my trading bias remains bearish, unless a strong technical reversal emerges.
That said, the U.S.–China trade tensions currently carry even greater importance in shaping market direction.