On September 20, Barclays argued that while the Federal Reserve has indicated it can reduce interest rates while shrinking its balance sheet, it recommends ending the balance sheet reduction early due to risk management considerations.

Barclays still expects the Fed to end quantitative tightening in December, with an announcement expected from the Federal Open Market Committee (FOMC) in November.

"In 2019, reserve scarcity exacerbated already tight repo market conditions, driving funding rates sharply higher and causing significant disruption in the US Treasury market," wrote Barclays strategist Joseph Abate in a note to clients. "We believe this outweighs the risks of holding reserves at a slightly higher level than necessary."