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‘Significant Shrinkage’
By Kevin Muir of “The Macro Tourist” fame; reposted here with permission
Remember all the hullabaloo back in September about the Federal Reserve’s decision to shrink their balance sheet? Believe it or not, it was somewhat of a big deal and many strategists were warning about the lack of support for risk markets from this action.
Here is the actual announcement from the FOMC’s press release:
Effective in October 2017, the Committee directs the Desk to roll over at auction the amount of
That sound is air leaking from the balloon. Over the coming year, the combined QT of the Fed and ECB will start a crap storm in the markets, which will be exacerbated by the BOJ. It will carry on through 2019 and into 2020. Expect a restructuring of some kind in the international monetary system before it’s all done. This is the calm before the storm. By 18 months from now, nobody will be able to believe it was this calm and optimistic in Jan 2018.