By allowing its bonds to mature without reinvesting the proceeds, the Fed hopes to shrink its balance sheet by up to $95 billion a month. The cycle coincides with the central bank's steps to rein in market liquidity through a process known as quantitative tightening.
BOBA STOCK SERIES
To start his argument that a recession is coming, Michele points out that the Fed's moves since March 2022 are its most aggressive series of rate increases in four decades. Even among those who see recession ahead, few think it will be as severe as the 2008 downturn. Goldman Sachs economist Jan Hatzius recently dialed down the probability of a recession within a year to just 25%. Other market watchers do not share Michele's view.īlackRock bond chief Rick Rieder said last month that the economy is in "much better shape" than the consensus view and could avoid a deep recession. The crosscurrents have divided the investing world into roughly two camps: Those who see a soft landing for the world's biggest economy and those who envision something far worse. Higher rates, the reversal of the Federal Reserve's bond-buying programs and overseas strife made for a potentially dangerous combination, Dimon and others have said.īut the American economy has remained surprisingly resilient, as May payroll figures surged more than expected and rising stocks caused some to call the start of a fresh bull market. Top Wall Street executives, including Michele's boss Jamie Dimon, have raised alarms about the economy for more than a year. The end to a nearly 15-year period of cheap money and low interest rates around the world has vexed investors and market observers alike. "Then you had a steady three-month rally in equity markets." "The markets viewed it as, there was a crisis, there was a policy response and the crisis is solved," he said. Last month, JPMorgan bought failed regional player First Republic in March 2008, JPMorgan took over the investment bank Bear Stearns. In both cases, Michele's employer calmed frayed nerves by swooping in to acquire a troubled competitor. Then, as now, investors were concerned about the stability of U.S. "This does remind me an awful lot of that March-to-June period in 2008," said Michele, rattling off the parallels. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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