Omega Management logo

Wall St Week Ahead More worries for U.S. stocks, bonds: Fed ramps up ‘QT’

Morning commuters walk on Wall St. as the Union Jack flies at half staff outside the New York Stock Exchange (NYSE) in New York City, U.S., September 9, 2022. REUTERS/Brendan McDermid

Register now for FREE unlimited access to Reuters.comRegister

NEW YORK, Sept 9 (Reuters) – As the Federal Reserve accelerates the unwinding of its balance sheet this month, some investors worry that so-called quantitative tightening may weigh on the economy and make this year even more brutal for stocks and bonds.

After roughly doubling its balance sheet to $9 trillion after the pandemic, the Fed began unloading some of the Treasuries and mortgage-backed securities it holds in June at a pace of $47.5 billion. It has announced that this month it is ramping up the pace of quantitative-tightening to $95 billion.

The scale of the Fed’s unwinding is unprecedented and the effects of the central bank ending its role as a consistent, price-insensitive buyer of…

Read more…