If the Fed is shedding it’s longer-term bond holdings, selling them into a market with stronger demand would seem to mitigate the restrictive effect of double-tightening. Are investors now helping the Fed get back to its goal of normalizing monetary policy?
When the Fed sells its holdings, investors have less money in aggregate to invest. Less money to invest, means lower demand. Lower demand causes price drops (assuming supply remains the same). It’s basic economics.
Has the velocity of money circulating through the economy actually picked up significantly (like M2)? It has been heading steadily down. I remember Marc G saying he felt this was important to. In 2017 it reached a 55 year low but has ticked up a tiny bit lately. Is it turning around?