Quantitative easing explained simply

When the economy slows down and interest rates are already close to zero, central banks can no longer cut rates effectively. So they use QE: they buy bonds on the market, increasing demand for them and pushing up their prices (and therefore lowering their yields).

Lower yields on government bonds push banks and investors to lend or invest elsewhere: businesses, mortgages, stocks. The goal is to get the economy moving again.

QE tends to support stock markets: more liquidity in the system means more money looking for returns, and some of it ends up in stocks and other riskier assets. It also lowers the cost of public debt, because government bond yields fall.

It also has side effects: it can fuel inequality (those who own assets benefit more) and, if overdone, can contribute to inflation when the economy is already overheating.

During QE, mortgages and loans tend to cost less, stock markets rise and government bond yields are low. If you have a portfolio, you probably see your stocks or ETFs rising, but new bond investments yield little.

When the central bank stops or reduces QE ("tapering"), the opposite happens: rates rise, stock markets may rise less and government bond yields climb back up. That's why every QE or tapering announcement moves markets.