NEW YORK, Sept 24 (Reuters) – The Federal Reserve’s signal that it will soon unwind its bond buying program is bolstering the case in financial markets for the so-called reflation trade, which lifted Treasury yields and boosted shares of banks, energy firms and other economically sensitive companies in the early months of 2021.
The reflation trade stalled during the summer. But the central bank said this week it would likely begin pulling back on its $120 billion a month government bond purchasing program as soon as November, while also signaling that it may raise interest rates in 2022, earlier than many expected. L1N2QN1LU
Though monetary tightening is frequently seen as a drag on stocks, some investors view the Fed’s stance as a vote of confidence for the U.S. economy.
“Normally, a hawkish turn would…