Tag: QT

The U.K. Is Not In An Enviable Position

The U.K. Is Not In An Enviable Position

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

$95 Billion Per Month In QT Is A High Bar

$95 Billion Per Month In QT Is A High Bar

The Fed was to have achieved a $95 billion per month Balance Sheet reduction run rate by September ($60 billion of Treasury securities and $35 billion of mortgage-backed securities). The culling of $60 billion in Treasuries per month is going to be difficult to execute. The Treasury market lacks liquidity as evidenced by the sharp … Continue reading $95 Billion Per Month In QT Is A High Bar

A NASDAQ Bottom. QT Or Not To QT?

A NASDAQ Bottom. QT Or Not To QT?

If the Fed raises by 100 BPS tomorrow we believe there is another 10% downside to the NASDAQ before October earnings. We believe the NASDAQ will continue to work lower as the Fed hikes its Fed Funds Rate and as Treasury yields climb. We expect the Fed's rate hiking will stop by early next year … Continue reading A NASDAQ Bottom. QT Or Not To QT?

How The Fed’s Balance Sheet Has Changed

How The Fed’s Balance Sheet Has Changed

We detail changes in the Fed's Balance Sheet since May 2022 as the Fed has embarked on its QT program (which has yet to kick into high gear). QT ramps up this month. Approximately $92 billion of Treasury securities have been pared from the Fed's Balance Sheet since May 4th 2022.Approximately $6 billion of Government … Continue reading How The Fed’s Balance Sheet Has Changed

QT Has Yet To Kick In Yet Yields Have Moved

QT Has Yet To Kick In Yet Yields Have Moved

Once the Fed fully ramps its QT effort logic suggests that Treasury yields will climb higher as it is unlikely that a buyer(s) exist to offset the Fed's Balance Sheet runoff. Thus, Treasury prices are likely to fall and yields will climb. Risk assets are likely to decline in value during this QT period. The … Continue reading QT Has Yet To Kick In Yet Yields Have Moved

A Return To Fundamental Investing

A Return To Fundamental Investing

When may this occur? Don't hold your breath. Investors' obsession with interest rates will likely persist until the market finds a bottom. It is unlikely that equity markets will find a bottom while the Fed is tightening monetary policy. We saw the NASDAQ Composite recover in October 2019 as the Fed became more accommodative. We … Continue reading A Return To Fundamental Investing

August CPI To Remain Robust

August CPI To Remain Robust

The Cleveland Fed's current August year-over-year CPI estimate is 8.3%, down 0.2% from July's 8.5% level. The bank estimates August Core CPI at 6.3%, up from July's 5.9% level (while oil prices have fallen, food prices continue to rise). We quote the Cleveland Fed as the bank's view on CPI and Core CPI is in-line … Continue reading August CPI To Remain Robust