S&P 500 could drop 7.0% on Fed’s QT through 2023 – BofA
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The winding down of the central bank’s balance sheet poses a risk to equity prices, according to Bank of America (BofA), reported Bloomberg late Monday.
“When looking at the historical relationship between the Fed’s bond purchases and S&P 500 returns from 2010 to 2019, the bank concluded in a research note on Monday that quantitative tightening through 2023 would translate into a 7% drop in the benchmark gauge from current levels,” the bank report also mentioned.
BofA also mentioned, per Bloomberg, “Quantitative Easing (QE) has explained more than 50% of the movement in the market.”
Bloomberg also quotes Chief Investment Officer at Independent Advisor Alliance as saying, “Quantitative Tightening (QT) has undoubtedly taken a back seat to more pressing issues such as inflation and recession angst.”
Also read: Modest losses prevail in stocks
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