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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 689.52-0.3%Jan 7 4:00 PM EST
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To: Clam digger who wrote (173999)5/14/2022 10:42:23 AM
From: Machaon   of 221443
 
Clam digger
Certainly we are closer to a bottom than a top.


I would think that the Fed's reduction in the balance sheet should have a negative effect on the market. It starts June 1st. I'm attaching the Fed's news release, spelling out it's upcoming balance sheet reductions. I'll have to admit, I don't really understand the fed-speak, all I know is that it means "reduced". How is mother market going to react?

Federal Reserve:
  • Consistent with the Principles for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in January 2022, all Committee participants agreed to the following plans for significantly reducing the Federal Reserve's securities holdings.
  • The Committee intends to reduce the Federal Reserve's securities holdings over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments received from securities held in the System Open Market Account (SOMA). Beginning on June 1, principal payments from securities held in the SOMA will be reinvested to the extent that they exceed monthly caps.
  • + For Treasury securities, the cap will initially be set at $30 billion per month and after three months will increase to $60 billion per month. The decline in holdings of Treasury securities under this monthly cap will include Treasury coupon securities and, to the extent that coupon maturities are less than the monthly cap, Treasury bills.
  • + For agency debt and agency mortgage-backed securities, the cap will initially be set at $17.5 billion per month and after three months will increase to $35 billion per month.
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