Fed Policy Outlook: Liquidity Tightening and Market Implications
The Federal Reserve's quantitative tightening continues at a measured pace, yet markets remain firmly in risk-on mode. M2 money supply expanded just 0.44% month-over-month to reach $23.2 trillion. This figure tells the story of a liquidity picture neither expanding aggressively nor contracting sharply. The Fed's balance sheet sits at approximately $80.5 billion, down from peak levels but still substantial. The September 4 price action across asset classes confirms that markets have priced in this gradual liquidity withdrawal and are looking past it to other drivers.
Key Takeaways M2 money supply grew 0.44% month-over-month to $23.2 trillion, indicating the Fed's liquidity withdrawal is procee…
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