Enter Deutsche Bank, which forecasts that once QT begins, the Fed's balance sheet will shrink from $9 trillion currently to $6 trillion.

As DB's Jim Reid notes overnight, citing the bank's economist Matt Luzzetti and rate strategist Steven Zeng, project that the Fed balance sheet would peak just under $9tn after QE completes in March, before falling back to eventually approach 20% of GDP from over 35% today, and around a third smaller than this peak, at which point it will be around $6 trillion.

That, according to Kostin, is a level more consistent with the pre-covid experience and a potential target highlighted by Governor Waller. Under this projection, the balance sheet would reduce by $560bn this year and $1tn in 2023, and the balance in outer years.

As an aside, there zero chance of that happening as by then the US will be in a recession and the Fed will be scrambling to ease as even the market now expects, projecting the next rate cut will take place between 2 and 3 years from today.