No. I am serious. It’s time to check your portfolio when US FED is ready to increase their policy rates, and other may be some possibility that there will be half percent hie or what they say, 50 basis points. That is big, but another issue is the unwinding of their investment portfolio. Their Quantitative easing program has full strength to handle liquidity to the whole world, but as they describe it in the November policy rate, they change their view on inflation. And that is important. They accepted that inflation was here to stay. With reduced bond-buying, it is no secret that their quantitative easing will end in march 2022. That month itself, we may see the first half percent hike, which will be the first in two decades.
In December 2020, with its balance sheet at $7.4 trillion, the Fed started the clock on the end of its bond-buying, promising to keep up the $120 billion a month pace “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” This language remained unchanged for the statements issued in January, March, April, and June 2021.
I still remember how Indian markets reacted to the taper in 2015.
The Bank of England took the lead, raising interest rates by 25 basis points to 0.5 percent last week. As a result, traders primarily see a 50 basis points Fed rate hike in March.
Bond buying of the US Federal Reserve Will end in March 2022. However, from the data coming into the light, It is clear that the direction of rates and inflation will be up hereafter.
As a considerable Sum of money is drying, Foreign Institutions turned into net sellers. As I am writing, HDFC, HDFC Bank, the favorite stocks among FIIs, were down. Many institutions sold their big chunk of portfolios, and Kept cash as a Reversal of bond buying is in sight.
Oil is Inching towards $100/barrel. Though India is not buying WTI or Brent altogether, What both showing is Import payment will be hereafter.
Forex Reserves are going lower. That is not shocking as Foreign Institutions are selling, so RBI is supposed to Pay them. To keep it Balanced, Maybe Government wants to come up with LIC IPO.
Anyway, 2022 will not be easy for investors.