Last week the Federal Reserve announced it would begin tapering (cutting back on) bond purchases this month. It looks like the start of the tightening cycle has arrived.
What Does Tighter Monetary Policy Mean For Stocks?
In our October Market Update, we look at how stocks performed during the last Fed tightening cycle. It turns out that stocks were quite resilient as the Fed tightened from 2015-2019. Despite an initial spike in stock market volatility, U.S. stocks earned double-digit annualized returns during the five-year period when the Fed cut it’s balance sheet and raised rates.
Read more about the Fed’s decision, how markets are responding, and our outlook for stocks and bonds in the face of potentially higher interest rates here.