How Central Bank Balance Sheets Shape Asset Prices
Central bank balance sheets is a useful lens for understanding liquidity, duration and risk premia. Quantitative easing and tightening change the supply of reserve assets and the duration held by private investors. These shifts can influence term premia, cross-asset correlations and the relative value of cash, bonds and equities.
Why it matters for portfolios
Balance-sheet policy is not just a rate decision; it changes the amount and composition of risk that markets must absorb.
What to watch
balance-sheet runoff, reserve levels, term premia and repo-market conditions
This article is for educational purposes only and does not constitute investment advice.