Operating at the Intersection of Technology and the Capital Markets
Category: Economy
Used vehicle prices continue to decline as have sales volumes. This is not unexpected as interest rates have climbed over the past number of months. Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis), decreased 3.0% in September from August 2022. The non-adjusted price change declined 2.3% year-over-year in September. September was the … Continue reading Used Vehicle Prices Decline As Rates Climb
Talking heads were out in droves on Thursday speaking about the illiquid Treasury market and how it may soon crack - triggering the need for Fed intervention. Sure, yields are moving around as the Fed tightens. However, this past week's movements in the 2-Year and 10-Year Treasury yields were not any more volatile than in … Continue reading Is The Treasury Market Really That Illiquid?
The Fed pared its Treasury holdings over the past week at a faster pace compared to any other week during this QT period. The Fed's Treasury holdings were approximately $37.9 billion lower over the past week and $56.8 billion lower on a rolling 4-week total basis. The Fed's Government Agency holdings were unchanged over the … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
The Fed's tightening is as much about its quest to regain credibility as it is about curbing inflation. The fact that prices for goods and services started to climb in 2020 and have persisted higher for two years is no surprise. The Treasury (subsidized by the Federal Reserve) mailed trillions of freshly-printed U.S. Dollars (helicopter … Continue reading The Fed’s Quest To Regain Credibility
It feels as though a crisis of confidence is brewing. What will happen when the Bank of England stops buying long bonds? Can the U.K. run its version of QE while inflation is climbing? How high will the Dollar climb? How low will earnings and economies fall?Will Credit Suisse fail? Will the Fed pivot? (I … Continue reading Crisis Of Confidence & The Fed Put
Expect global yields to march higher for the foreseeable future. The Fed would need to pause its rate hikes to stop yields from climbing. The Fed will continue to raise the Fed Funds rate, thereby pushing yields higher along the yield curve. We are in the midst of a global recession that is likely to … Continue reading Global Yields Will March Higher
One element to consider when contemplating the forward yield curve and equity premiums is that the yield curve may settle at a level that is higher than what investors anticipate in the out years - say 2025 forward. P/E Multiples are behaving as if a zero percent Fed Funds Rate is the long-term norm, which … Continue reading Positive Real Yields
During the week ended September 28th, the Fed reduced its Treasury security holdings by approximately $2.1 billion and reduced its Government Agency security holdings by approximately $16.7 billion. Recall the Fed stated that it would reduce its Treasury holdings by up to $60 billion and reduce its Government Agency holdings by up to $35 billion … Continue reading QT Lite
P/E multiples will be in flux for the next few months. Phase I will begin in October. Phase II will begin in January. The sequence will look something like the following: Analysts: Many sell-side analysts will revise their December quarter Revenue and Earnings estimates downward coming off of the September quarter earnings calls beginning in … Continue reading P/E Multiples In Flux
Credit Markets (Yes): A liquidity crisis would cause the Fed to pivot. If the credit markets seized up the Fed would intervene. Market intervention is after all the Fed's operating model (as is the case for all central banks). Consumers and investors would have to lose confidence in the U.S. Economy to the point where … Continue reading What Would Cause The Fed To Pivot?
You must be logged in to post a comment.