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.




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

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