Federal Reserve is Tightening

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Over the past 6 months, the money supply has not grown and the Federal Reserve has reduced their balance sheet by $200 billion. As the government continues to issue more Treasury Bonds to finance the deficit, private investors need higher interest rates to be enticed to buy Treasuries. This is a classic example of the “Crowding Out Effect”.

Written by

James E. Gore, CFA®, CAIA, CMT®

Jim serves as the Chief Investment Officer of THOR, is a Chartered Financial Analyst charter-holder, a Chartered Alternative Investment Analyst, a Chartered Market Technician, a member of the Association for Investment Management and Research and a member of the Cincinnati Society of Financial Analysts.

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Federal Reserve is Tightening