QUICK DEFINITION
Quantitative Tightening is a reduction in a central bank's securities holdings, typically through runoff, non-reinvestment or asset sales.
WHY IT MATTERS
Why Quantitative Tightening matters in bond markets
QT changes the supply of duration and reserves held by the private sector and can influence liquidity and term premia.
MARKET CONTEXT
How to think about it
Bond investors use quantitative tightening as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is Quantitative Tightening important for fixed-income investors?
← Back to the Bond Market Glossary Yes. QT changes the supply of duration and reserves held by the private sector and can influence liquidity and term premia.