Strategists Warn Walsh's "Rate Cut Declaration" Hides a Trap, the Cost Could Be Global Liquidity Contraction

Odaily According to Damian Boey, a portfolio strategist at Wilson Asset Management, Walsh has publicly expressed a preference for lowering interest rates. However, the trade-off he seeks to achieve this rate cut is a desire for the Federal Reserve to shrink the size of its balance sheet. The market's reaction seems to be pondering: What would the world look like if the Fed's balance sheet shrinks? Once the conversation starts about pulling support from the very foundation, all the assets people have been using to hedge against balance sheet expansion—such as gold, cryptocurrencies, and obviously bonds too—would begin to be sold off. (Jin10)