Tuesday, 6 November 2018

Global stocks face bear market risk as Fed drains balance sheet

Markets were mixed on Monday.

The S&P 500 rose 0.6 percent but the STOXX Europe 600 fell 0.2 percent and the Nikkei 225 plunged 1.5 percent.

“Investors face a wall of worry,” said Peter Bye, portfolio manager at UBS Asset Management, who noted “increasing evidence of pressure on tech leaders”.

Meanwhile, Richard Suttmeier wrote that the stock market will not rally for long with the Federal Reserve cutting its blance sheet.

“Between October 26 and November 2, the yield on the 10-year note rose from 3.06% to 3.224% as the Federal Reserve drained a massive $33 billion off its balance sheet,” he said. “Another $50 billion is scheduled to be the reduction each month through the year 2020. This risks a bear market for stocks around the globe.”

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