By David Brady
The big news today is the following headline from the Wall Street Journal:
Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff
The implication is that the Fed is considering ending the balance sheet reduction program much earlier than anticipated, a program that was supposed to run on auto-pilot. The Fed has always maintained that this would have little effect on markets, but that assumption was proven to be wrong in October, when the program hit its maximum run-off amount of $50bln a month and stocks dumped. If the Fed does plan