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yuenlo
Jul 27, 2018 4:39 PM

Quantitative tightening called the 27 June 2018 sell off Short

S&P 500 index of US listed sharesFXCM

Description

The red line is the federal reserve balance sheet, total assets. Most of the rallies since the January high have been during weeks where the fed has temporarily stopped shrinking its balance sheet. Another shrink was disclosed late on 26 June. The fact that the sell off occurred after the disclosure, rather than the shrink itself suggests investors are trading the announcement, rather than the liquidity reduction itself.
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