QE and QT
Quantitative easing buys bonds to lower long-term yields; quantitative tightening lets them run off the balance sheet.
Quantitative easing, or QE, is a central bank buying bonds to push down long-term yields and add liquidity, typically when short-term rates are already near their floor. Quantitative tightening, or QT, is the reverse: the central bank lets maturing securities roll off without reinvesting them, which drains reserves. The pace and composition are announced in advance.
On our site, QE and QT are tracked through the balance sheet series. Changes in the pace of runoff are often more informative than the level.
Traders care because balance sheet changes affect liquidity, term premiums and risk appetite. Markets often respond to announcements before the actual buying or runoff takes place.
Worked example (illustrative numbers, not real data): a central bank runs off 60 billion dollars of Treasuries a month. If it cuts the cap to 25 billion, it is still shrinking the balance sheet, only more slowly. Markets may read that as easier liquidity, even without any purchases.