QE-lite - the reinvestment issue

The Fed is not buying up any new debt with the end of QE3, so the balance sheet of the Fed will not be expanding, but there is an ongoing QE-lite policy. The proceeds from maturing bonds will be reinvested in new bonds which means that time will not reduce the Fed balance sheet. This is a bond ladder that will not go away 

In fact, through the portfolio balance effect, the Fed may still have an important impact on the yield curve through its purchases. It will have cash from bonds that mature and this cash could be invested out the curve to affect its shape. The "Twist" component of Fed policy will still exist even if rates start to rise on the front-end of the curve. 

QE-lite will be a new gift or tool of the Fed which creates new bond market uncertainty.