U.S. Stocks Hit Fresh Highs Despite the Fed and Geopolitics
Summary
The United Kingdom, as well as, Spain have felt the brunt of terrorist attacks this summer, with the latest one in London, but markets seem to see these events as par for the course.The Federal Reserve is the big daddy of them all and while they are unlikely to pull the trigger on higher rates until December of 2017, market participants are concerned with a change in the Fed’s balance sheet.During the financial crisis which began in 2008, the Fed started the process of adding government bonds to their balance sheet to buoy riskier assets.Investors now expect when the Fed meets in October they will announce a reduction in their bond purchase program, which will lead to quantitative tightening.While the Fed is looking for a rate of 2% to fill its mandate for tightening, a number that is close to their objective will not stop them from reducing their bond purchase program.