Shadow of tighter money falls on markets

Asset prices rise, more credit becomes available, prices rise again. At some point the increases become unsustainable, creditors get squeezed and prices fall.

In every useful specific, this time will be different: which asset class will turn over first, what the tipping point will be, how far prices will drop, and who will be left holding the bag.

The bankers did not so much say that tightening was imminent as remind the markets that tightening was possible.

The US stock market has taken notice.

This month, the gains tapered off, and the market leadership passed to financials, which benefit from higher rates.

Passive investment products account for much of the money flowing into the US market, so demand dynamics have changed, too.

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Article source: http://www.dailystar.com.lb//Business/International/2017/Jul-10/412163-shadow-of-tighter-money-falls-on-markets.ashx