Summary

• Investors are facing a brutal reality check as the much-discussed Warsh trade moves into a significantly heavier and more destructive phase. At the core of this widespread market selloff is the aggressive repricing for the effective emptying of the Federal Reserve balance sheet.
• As the central bank plans to gradually withdraw capital from the financial system, the dollar is gaining strongly, while most other asset classes are losing value.
• This could be the beginning of something much more significant, especially when looking at bond markets seeing volatility unseen since the 2022 hike cycle.

By Elior Manier

The morning session brings ruthless flows across all financial markets as participants actively price in absolute bloodshed ahead of the weekend.

Investors are facing a brutal reality check as the much-discussed Warsh trade moves

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