Old Dog Kiwi
-
$95 billion in monthly liquidity reduction to begin today
Starting today, the US Fed has pledged to run off its balance sheet (reduce liquidity in the banking system via ‘Quantitative Tapering’) by $95 billion a month–double the amount they were supposed to have been withdrawing (QT) since the start of June and about 5.5x the $17 billion per month they actually have withdrawn. We will soon discover whether they retain the resolve to execute amid plunging markets. Historically, reducing liquidity is a negative for financial markets. Moreover, (shown in blue below since 1987, courtesy of The Daily Shot), it has also led economic downturns (US manufacturing ISM in black) ... (full story)