Major central banks are set to continue shrinking their balance sheets even as the Fed ends QT: The European Central Bank, Bank of England, and Bank of Japan are expected to reduce their balance sheets by -$1.2 trillion in 2026. This comes as European Central Bank and Bank of Japan run-offs are expected to accelerate and nearly offset the pace of the Fed's QT, which concluded on December 1st. Meanwhile, the G4 central banks, including the Fed, reduced their total assets by -$1.4 trillion in 2024 and are expected to reduce by -$1.3 trillion by the end of 2025. To put this into perspective, these central banks bought +$7.7 trillion in assets in 2020–2021. If the 2026 projections materialize, they will unwind $5.0 trillion in the 2023–2026 period, or 65% of total pandemic stimulus. Global liquidity will continue to tighten.(The Kobeissi Letter)