Federal Reserve Balance Sheet May Shrink By $100 Billion A Month, Adding Stock Market Risk

The Federal Reserve gave the stock market a jolt on Jan. 5 when minutes from the December meeting revealed a consensus that Covid-era asset purchases should unwind sooner and at a faster pace than they did after the last crisis. Now, as the major indexes recover, a key question is whether there will be further shocks in the next few months as the Fed spells out its plan for shrinking its balance sheet.


Wall Street economists are beginning to place their bets, framing a baseline…

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