With the June Fed meeting coming up next week, analysts have once again been discussing the central bank's massive balance sheet

With the June Fed meeting coming up next week, analysts have once again been discussing the central bank's massive balance sheet. Basically, there are some who are concerned that selling bonds from the massive $4.3 trillion could crush economic recovery. With the Fed holding roughly 25% of GDP(!) in its portfolio, aggressive selling would certainly jack up long-term rates. Fortunately for the markets, the Fed has stated it has no intention of aggressively reducing its portfolio. In fact, the Fed's plan to hold an overly large portfolio as long as needed is the reason why bond yields are so low right now. Eventually, the Fed may be able to use non-traditional methods to reduce its bond holdings, such as reverse repurchase agreements. Let's see what is said (or not said) after next week's meeting. (VIEW LINK)