Fed Took First Step Towards Tightening, Says JPM's Michele

The transcript discusses the expiration of the supplementary leverage ratio (SLR) exemption, which allowed banks to hold more Treasurys without additional capital. The non-extension may lead banks to sell Treasurys, affecting yields and financial conditions. The debate centers on whether the exemption helped absorb deposits and Treasurys. The discussion also touches on the potential tightening of monetary policy as the Fed gradually normalizes conditions, with a $1.9 trillion stimulus adding to the supply-demand balance.

What does the discussion about the two-way argument regarding the supplementary leverage ratio suggest about market perceptions?

In what ways might the Fed's actions signal a tightening of monetary policy?