Possible scenario
Liquidity Strain Returns
25% Chance
A less benign outcome is that the purchase pause coincides with a visible firming in repo and short-term funding rates. The NY Fed and FOMC then face pressure to distinguish balance-sheet policy from the policy-rate stance and to consider reserve-management purchases.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
Secondary impacts
- Finance -1.0%
- Technology -0.8%
Portfolio impact
S&P 500-0.7%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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