The likelihood of increased rates resulting from the Fed unwinding its balance sheet could mean lower values across the board. Higher required rates of return mean lower values, all else being equal. Of course, each investment is unique, but overall, market multiples will face downward pressure from higher rates.
Ms. Yellen told the House Financial Services Committee that unwinding a $4.5 trillion-plus balance sheet that includes $2.5 trillion in Treasuries and the rest in mortgage-backed securities will probably take until 2022 before it shrinks to pre-crisis levels. Fed officials have not decided yet on longer-term policy framework that will affect the size of reserves, she said. "We do believe that the asset purchases were very effective in holding down rates," Ms. Yellen said.