WHAT WILL THE FED DO?

We seem to be entering a new phase with the Fed as there is beginning to be talk about about the Fed just letting some of its $4.5 trillion balance sheet of bonds mature and not renew them (see reference for the figure).*



(click on figure to enlarge)

"The biggest wild card is the politics. It's really important here, Europe, Middle East, North Korea. There's a lot of moving pieces," the former Pimco co-CEO [El-Erian] said in a "Squawk Box" interview. "The second-biggest wild card is the reaction of the economy to years and years of low, noninclusive growth."*
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... St. Louis Fed President James Bullard said opinions differed within the Fed on ending its balance sheet reinvestment policy, but he felt it could start later in the year. Bullard emphasized the central bank would not be actively selling assets, but rather not replacing them as they mature.*

* http://www.cnbc.com/2017/04/10/the-fed-isnt-even-close-to-being-the-biggest-wild-card-for-markets-mohamed-el-erian-argues.html