Operating at the Intersection of Technology and the Capital Markets
Tag: QE
The Fed modestly decreased its Treasury and mortgage-backed holdings during the week-ended Wednesday March 15th. Thus, the Fed simultaneously ran QT with QE running in the background in the form of the Bank Term Funding Program (BTFP). You may read about the BTFP's first week in operation by clicking HERE. Treasuries: The Fed’s Treasury security holdings … Continue reading The Fed’s Balance Sheet Reduction (QT) Update Premium
The Fed essentially did nothing this past week in terms of tightening the money supply. QT hasn't been nearly as aggressive as the Fed's QE efforts - especially when you consider the cumulative effect of QE from 2009-early 2022. This Fed's ideology is not aligned with getting CPI down to 2% as I wrote back … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
I would advise the Fed against pausing QT, but perhaps the central bank will pause QT this summer as part of raising the debt ceiling. By "pause" I mean the following: Congress will lift the debt limit this summer (it is not a question of "if" but "when"). Once the debt limit is lifted, Treasury … Continue reading QT Pause This Summer As Part Of Debt Deal?
Governments gorged on historically low interest rates since 2009 and issued record amounts of debt to fund all sorts of silly spending programs from economic "stimulus" checks to QE. Debt securities are subject to the laws of supply and demand as is any commodity. We have too much paper outstanding - especially as it relates … Continue reading More QE Is Coming. Stagflation Is Staying.
The Bank of England will likely institute an emergency rate hike of 25-50 BPS today in our opinion as the Pound plummets against the USD (FX Headwinds Will Persist Into 2023). What is fascinating is that the fiscal side loosened policy last week as U.K. Prime Minister Liz Truss pushed tax cuts. Conversely, the monetary … Continue reading The U.K. Is Not In An Enviable Position
So much for the Fed trimming its Balance Sheet by $95 billion per month. The Fed has expanded its asset base during the month of August. Fed assets stood at $8.9 trillion as of Wednesday August 10th. It is difficult to allocate this Federal Reserve any credibility as it relates to mitigating price inflation or … Continue reading QT or QE?
We wrote yesterday that we would be surprised if the Fed follows through on its stated plan to reduce its balance sheet by $95 billion per month as it seeks to unwind the heavy hand it played in 2020 and 2021 by subsidizing fiscal stimulus programs and executing its QE program. Robust Fed balance sheet … Continue reading No QT as Far as The Eye Can See
10-year Treasury yields sit around 2.72% and will climb higher as the Fed: a.) lifts the Fed Funds Rate and, b.) trims its balance sheet (i.e. quantitative tightening "QT"). There is no scenario in which the Fed executes QT only to have Treasury yields move lower. It is simply a question of supply and demand. … Continue reading Treasury Yields Will Only Move In One Direction
The Atlanta Fed's real GDP estimate of 3.7% is well below inflation as measured by the Fed (CPI of 5.4%) and well below any real world price inflation measure. We do not subscribe to the Fed's theory that price inflation is transitory. Our view is that price inflation will grow from here. If real GDP … Continue reading It Is Beginning To Look Like Stagflation
Despite a record increase in the Money Supply (M2) the U.S. economy likely will not experience near-term consumer price inflation given less than robust Personal Consumption. Further expansionary monetary policy will increase price inflation risk, particularly if Personal Consumption continues to rebound. This story is most efficiently told with pictures and captions. Click on any … Continue reading Near-Term Consumer Price Inflation Risk Is Likely Low
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