Operating at the Intersection of Technology and the Capital Markets
Category: Asset Management
Interest expense on Treasury Debt is climbing higher as Treasury Debt issues roll over at higher rates. 42% of Treasury Debt outstanding is in the form of Treasury Notes at an average interest rate of 2.08%. Notes that roll over will do so at a rate much higher than 2.08%, thereby pushing up the average … Continue reading Treasury Debt: Interest Expense Climbing Higher
This week’s BTFP activity: The Bank Term Funding Program (BTFP, bail out/QE) had approximately $107.7 billion in outstanding loans as of Wednesday this week, up from $107.6 billion (+ $0.1 billion) a week ago. The “other credit extensions” line item of $81.9 billion includes the FDIC loans made to regional banks. This figure is down from $85.0 … Continue reading Weekly Update: Bank Term Funding Program
The Fed's Treasury holdings are essentially unchanged from the prior week. Meanwhile, the Fed allowed approximately $15 billion of mortgage-backed securities to roll off of its balance sheet, the second time in five weeks the Fed has had that level of MBS activity. Good. The Fed blew the housing bubble and needs to unwind it. … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
The 5-year Treasury yield is 4.62% and the 10-year Treasury yield is 4.56%. Yellen has flooded the market with new Treasury issues in order to replenish the TGA that she drew down from $1.7 Trillion in January 2021 to only $44 billion by June 2023. These new Treasury issues push yields higher. Once this forthcoming … Continue reading Treasury Yields Could Go Higher
Other than Tesla, none of the pure-play EV Auto OEMs are going to survive. Tesla is with us only through the courtesy of fiscal subsidies and monetary excess (ZIRP, QE, the Fed's Covid-related stimulus activities including its various credit facilities, ETF purchases and monetization of the CARES Act). Without that fiscal and monetary excess, the … Continue reading The Pure-Play EV Game Is Over
First, an administrative detail: TEK2day readers may now find TEK2day on Substack HERE. We will publish our articles both here as well as on Substack. With respect to Enterprise Software earnings, I suspect that most Software companies will take a more conservative approach to their Q4 2023 and early 2024 outlooks as compared to prior … Continue reading Enterprise Software Earnings Outlook: Get Ready For Conservative Outlooks
Management teams are working through 2024 operating budgets and hopefully have figured out that interest rates will remain elevated for 2024. Companies carrying meaningful debt have no choice but to assume elevated interest will remain for the foreseeable future (we believe a 5 handle makes sense for the 10-year). In terms of the People budget, … Continue reading 2024 Enterprise Software Budgets: Gen AI To Get Axed?
The Fed resumed its overly modest QT program this week. It is better than zero activity. We'll take it. We would like to see the Fed rid its balance sheet of the excesses of 2020-2022 over the next several years at a clip of approximately $1.5 Trillion per year. Treasuries: The Fed’s Treasury security holdings declined … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
This week’s BTFP activity: The Bank Term Funding Program (BTFP, bail out/QE) had approximately $107.6 billion in outstanding loans as of Wednesday this week, down from $108.0 billion (- $0.4 billion) a week ago. The “other credit extensions” line item of $85.0 billion includes the FDIC loans made to regional banks. This figure is down from $133.4 … Continue reading Weekly Update: Bank Term Funding Program
Back on August 12th we wrote that 4.50% would be a logical yield for the 10 year Treasury. We are there. More recently we have written that a 5-handle makes sense for the 10-year. A 5% yield is around the corner. Too many investors believed the Fed was taking rates close to zero percent in … Continue reading 10-Year Treasury Yield Marching Toward 5%
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