Understanding The Impacts Of QT On The U.S. Equities Market

Quantitative Tightening (QT) has been a hot topic for investors, especially those in the U.S. equities market. While the dynamics of monetary policy might seem complex, the core idea behind QT’s influence on equities is simple: when the Federal Reserve pulls money out of the system, it causes stock prices to fall.

Here is a chart of the Fed’s balance sheet and it tells the tail of the stock market’s performance as QE then QT pumps money in and out of the economic system.