Fed balance sheet drawdown enters phase of uncertainty

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Government debt management obscuring efforts to read market liquidity

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Fed officials unlikely to change balance sheet drawdown at this week's meeting

By Michael S. Derby

NEW YORK, Jan 29 (Reuters) - The Federal Reserve, which wraps up its latest monetary policy meeting on Wednesday, is about to enter one of the more challenging periods of managing what most observers believe is the approaching endgame for its balance sheet drawdown. That's because even as the Fed is expected in coming months to get financial sector Elite proxy liquidity down to levels that will allow it to stop rolling off expiring Treasury and mortgage bonds from its balance sheet, it will be hard to try to get a handle on how tight liquidity is. Why? The U.S.