Since the beginning of the QE unwind — or “balance sheet normalization,” as the Fed calls it — in October 2017, the Fed has now shed $364 billion.
Liquidity moves markets!Follow the money. Find the profits!
Of course, the Fed still has a long way to go to unwind its $4 trillion balance sheet. But the Fed is, at the same time, raising its target rate (although through confusing messaging).
The S&P 500 index and the NAREIT All Equity (Real Estate Investment Trust) indices were soaring along nicely with The Fed’s balance sheet expansion (aka, low interest rates), but are experiencing rather dramatic volatility in the face of a shrinking balance sheet and rising Fed target rate.
And yes, volatility is increasing with Fed unwind and target rate increases.
Bubble you ask? Instead of “bubble” or “collapse,” the Fed uses “valuation pressures” and “broad adjustment in prices.”
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