Chart shows the close relationship between the S&P 500 and Fed liquidity
Apollo Global Management chief economist Torsten Slok, shows the close relationship
Here, Fed QE is defined as the Fed’s total assets minus the balance of the Treasury General Account as well as the temporary cash added or drained through overnight reverse repos.
“With the Fed turning more hawkish and continuing QT [quantitative tightening], the downside risks to equities are growing,” he said.
It should, of course, be noted that dual Y charts are inherently misleading, since the magnitude can be altered just by playing with the axes. That said, the idea that liquidity is a key driver of financial asset performance is widely shared. One of the concerns coming out of the debt-ceiling impasse was the impact of delayed Treasury bill issuanc
Steve Goldstein MarketWatch 19 June 2023
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