Some pundits are saying that the Fed will stop tightening in mid-2019. But by then the damage will be done. The markets are slowly being starved of liquidity right now. It has shown up in the relentless rise of Treasury bill rates, and the upward pressure on bond yields, particularly in the junk bond arena, but also in Treasuries, as the 10 year hangs around near 3%.


Meanwhile, despite the bullish pronouncements of stock market pundits, the so called "bull market" hasn't made a new high in 5 months.


the Treasury simultaneously issues an average of $100 billion per month in new supply, that will pull cash from the financial liquidity pool. So make no mistake. There will be pain for both stocks and bonds.


The little bit of printing by the ECB and BoJ now doesn't offset the Fed pulling $40-$50 billion per month out of the financial system and extinguishing it. The BoJ and ECB are reducing their QE and the ECB has indicated it will stop buying altogether in December. The BoJ has been reducing its purchases without saying much about it other than to proclaim, "QE now! QE forever!" But their balance sheet growth has been materially slowing down in recent months. The BoJ is tapping the brakes, just like the ECB.

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