Operating at the Intersection of Technology and the Capital Markets
Category: Financial Services
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
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
The Fed created the mess that we are living in as it relates to the price dislocations we have suffered across goods, services and various asset classes since 2H 2020. Too much is being made of today's Fed rate decision and the related projections below. Not enough is being made of the Fed's anemic QT … Continue reading Today’s FOMC Meeting: Much Ado About Nothing
The Fed's actions with the money supply carry more economic weight than its actions with its Fed Funds rate. As far as QT is concerned, the Fed has already paused. Thus, whether the Fed raises rates tomorrow or in October or at all, the real story is that the Fed has put the brakes on … Continue reading The Fed Has Already Paused
For some companies, debt repayments are taking priority over innovation and other operational initiatives. Aside from zombie companies going bankrupt as a result of the Fed holding rates higher for longer, there is an entire class of Technology companies that will continue to suffer as a result of higher interest rates for longer. Take SS&C … Continue reading When Debt Payments Take Priority Over Investing In The Business
If you look at what's happening with Treasury yields on the 2yr, 3yr, 5yr, 7yr, 10yr, 20yr and 30yr bonds it implies that fixed income investors believe that the Fed is not taking rates back to zero. The 10 year Treasury bond yield still looks too low relative to the 5yr, 7yr and 20yr (I'd … Continue reading Treasury Yields Imply Rates Will Stay Higher For Longer
Layoffs are ticking up now (Google, Cisco, Roku, Evolve, Drift to name a few) as companies work through 2024 operating budgets. As interest rates and the cost of capital remain elevated in Q4, I suspect that companies - especially those with elevated Debt/EBITDA ratios - will announce further layoffs in October and November. However, I … Continue reading When Will The Next Big Round Of Layoffs Occur?
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