The S&P 500 was closed more than 1% on Wednesday evening
The Federal Reserve can shift policies to tapering asset purchases in the near future, behind unexpected economic data.
Recent comments from US Central Bank officials suggest this is true as strong employment figures and high inflation measures emerge.
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Fed Gov. Christopher Waller and Fed Bank Presidents Eric Rosen Gren, Robert Kaplan and Jim Bullard have each publicly declared the need for a tapered September.
Additionally, a memo from the Fed meeting at the end of July suggests that the US Central Bank will reduce monthly purchases of $120 billion in financial obligations and mortgage aid securities.
However, we believe there are significant risks to do so, including ongoing concerns from the coronavirus delta variant and the opportunity costs of employment shortages.
The S&P 500 index fell by more than 1%, with stocks falling sharply due to choppy trading.
“Today’s market movements and minutes from the latest Federal Reserve meeting serve as reminders to bring about how well the markets operated with central bank support are conditioned,” said Quilter Investment. said Hinesh Patel, the home’s portfolio manager.
“The market is hooked on the vast amount of money available, and this will clearly be a withdrawn process to reduce the liquidity it has become accustomed to.”
The Fed certainly seems to have shifted its position to clearly entertain the possibility of doing just that, without considering changing its policy.
“As we’ve seen with various tapered tantrums over the years, this puts the market on the market and doesn’t help the mixed messages coming out of the central bank,” Patel added.
“But investors need to prepare better. The current policy setting was suited to mandated economic closures at the depths of the global pandemic, but better conditions than the US economy exists today. Not that.”
