Deutsche Bank’s Alan Ruskin has produced a fairly balance piece on what the reduction in the Fed balance sheet means for the dollar. While balance sheet reduction is likely to be ”materially supportive” for the USD, it’s a long way from being a game changer, says Ruskin. In fact, a bear steepener – which is what balance sheet reduction implies – would typically weaken the dollar, writes Ruskin. But not all bear steepeners are created equal. A steepener driven by balance sheet reduction represents policy tightening and an increase in real long-term rates. This has very different consequences for currencies, where inflation is pushing up yields and driving curve steepening. Yesterday DB hosted a conference call late last week that covered everything from the mechanics of running down the balance sheet to its implications for all rates and FX markets. Ruskin’s piece is on the research portal, while you can contact your local salesperson for the dial in code for the call replay.