The Federal Reserve is now hacking its own zombie recovery to death and eating it by reversing the actions it employed to create this artificially supported recovery. Each time the Fed unwinds its balance sheet, 10-year bond rates recoil, and the stock market dances along in countermoves and wild swings. The main theme of my blog has always been that the Fed’s centrally planned economic recovery dies as soon as the artificial life-support is removed.
Blinded by economic denial because they are evangelists to the Fed’s religion, market pundits are finding any rationale they can to avoid connecting the Fed’s Great Unwind with these huge swings in long-term interest rates and the obviously corresponding counter-swings of the stock market. For those who have eyes to see, however, it should be clear that the world’s largest bond and stock markets are shuddering as the supports are removed….
—David Haggith
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