You have to wonder if the Fed doesn't just end QE purchases this month. Why are they tapering slowly only to turn around and give it back in a few months?
- Very accommodative stance is 'out of synch' with economic outlook
- Covid likely to weigh on labor force participation and prolong supply chain disruptions
- Virus surge likely to slow rotation to services spending from goods
- Own preference is to run down balance sheet 'earlier rather than later'
It's all about the balance sheet from here. Bonds look like a horrible investment with the Fed working against you.
