The Fed Starts its Balance Sheet Drawdown in October Says Hollis Kookmin Financial
SEOUL, South Korea, Sept. 22, 2017 /PRNewswire/ -- Hollis Kookmin Financial have commented on the recent move by the Fed as it will gradually reduce the substantial volume of treasury bonds and securities backed by mortgage loans on its balance sheet and will keep focused on reinvesting 15 and 30-year securities.
On Wednesday, September 21, the Fed said that starting with October, it will begin to reduce its balance sheet of $4.5 billion, most of which was acquired in the midst of the financial crisis of 2008.
Hollis Kookmin Financial clients have seen a 12% increase after the announcement boosting their overall equity positions in the US markets.
Harvey Fletcher who is an experienced trader in US equities at Hollis Kookmin Financial has commented on the recent development from the Fed "This is due to the overall consensus that the US economy is strengthening, with consistent data in labor figures, higher economic activity, job gains and household spending also increasing".
According to Hollis Kookmin Financial, the Fed will begin to reduce the balance by no more than $ 10 billion a month. The amount will grow quarterly until it reaches $ 50 billion per month.
It means that in the first year, the balance will decrease by about $ 300 billion, and for the second year - by almost $ 500 billion. The controversial stimulus program started as a reaction to the financial crisis in 2008. The goal was to keep mortgage rage flat, and eventually inject money into the economy.
Commenting the FOMC decision to trim the balance sheet, Director of Corporate Equities at Hollis Kookmin Financial Oliver Hunter said: "This is a historic move; the Fed has decided to write the final chapter of its bonds policy during the crisis period."
Analysts at Hollis Kookmin Financial noted that next year the regulator expects three rate increases, two in 2019 and one in 2020.
About Hollis Kookmin Financial
Hollis Kookmin Financial offers wealth management solutions to individuals, corporate companies and other entities around the world. Our extensive network is formed from the head office, located in Seoul, South Korea and our retail operation is located in Montreal, Canada.
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