8th January 2021
2020 began with an abundance of monetary support. The Fed’s U-turn on rates in late 2018, coupled with the resumption of QE in the wake of the Q4 ‘19 repo market problem, created a backdrop of loose financial conditions. Such extreme action, however, was not suggestive of a stable financial system. The situation on the ground was also challenging as a large proportion of workers had barely enough savings to last more than a few weeks and had to rely heavily on government support when Covid hit. Despite one of the longest economic expansions in history, the US fiscal deficit topped $1 trillion at the end of 2019. Not exactly a healthy starting position for 2020.
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