My take on what @AndreasSteno is saying is that we may see near-term inflation, especially due to Chinese covid-Zero policy meeting omicron pre-Olympics. And that might get CBs to pull forward hikes.
But this will be the peak in inflation. Tightening matters more for 2022
— Edward Harrison (@edwardnh) January 4, 2022
With the Democrats struggling to pass another stimulus bill, and the Fed beginning to “taper” their bond purchases, liquidity will reverse next year. The annual rate of change in the S&P 500 compared to our “measure of liquidity”, suggests some risk ahead.https://t.co/9fe72OuaL8 pic.twitter.com/8vn0tmaXjl
— Lance Roberts (@LanceRoberts) January 4, 2022
Fed officials have begun guiding investors to expect balance sheet runoff that starts sooner and goes faster than the last time they were doing this.
Why? The macro backdrop is different. And so is the portfolio.
Left uncapped, it could shrink fast. https://t.co/L65zFHVnmI
— Nick Timiraos (@NickTimiraos) January 4, 2022