Since emerging from the COVID pandemic, the Fed has contracted the size of its balance sheet, also known as Quantitative Tightening (QT). They've done this by allowing their Treasury holdings to mature without reinvesting the proceeds. This has placed upward pressure on yields, all else equal. But the Fed is expected to slow this process later this year. Mark Cabana says this is good news for the Treasury market as it means the private sector will have less total supply to absorb. And while some investors are fond of making the connection between the Fed balance sheet and the S&P 500, it's interesting that the S&P is making new highs while the balance sheet has shrunk, albeit from elevated levels. Mike Gapen discusses why that may be happening.

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