4min chapter

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Monetary Tightening & the End of the Risk-on Trade | Mohamed El-Erian

Hidden Forces

CHAPTER

Is the Federal Reserve Coopted by Markets?

Investor expectations have been shaped by the reassuring posture of central banks. Do you think that this conditioning has made markets more resistant to embracing a new regime of insufficient supply, spotty liquidity? And if so, what does that mean for the type of volatility that we should be prepared to see once markets try and readjust That's my first question. Maybe it is because the federal reserve was so worried about financial instability that it ended up with a perel to the metal approach when the economy would have called for something else.

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