Why Investors Should Worry About the Fed’s Balance Sheet Reversal

Investors are worried about the Federal Reserve’s commitment to raising interest rates.

The Fed tends to keep rates high until the economy begins to contract.

Many analysts follow the “three steps and a stumble” rule.

Years ago, traders noticed that stocks sold off after the Fed raised rates three times.

Interest rates are the most visible part of the Fed’s policy.

But the Fed’s other tools include balance sheet reversal.

How the Fed Uses Balance Sheet Reversal

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