Operating at the Intersection of Technology and the Capital Markets
Tag: Treasuries
Yesterday we wrote that we believe that Fed Chair Powell will be non-committal when he speaks from Jackson WY on Friday. Bodies in motion stay in motion. Therefore, if Powell says a whole lot of nothing on Friday, there will be no reason for the 10-Year Treasury yield to reverse course. As we wrote earlier, … Continue reading The 10-Year Treasury Yield Has Upward Momentum
The fact that the U.S. is technically insolvent is enough reason for fixed income investors to want a higher yield on 10-year Treasuries. However, even if you are more sanguine about the United States' financial position than I, you ought to want a higher 10-year Treasury yield. Since January 1990, the spread between the 10-year … Continue reading 10 Year Treasury Yields Will Move Higher
The Fed significantly reduced its Treasury holdings the week-ended Wednesday May 3rd (i.e. "QT"), but is simultaneously running a QE program in the background to back-stop regional banks. See our "Weekly Update: Bank Term Funding Program" article for details on bank bailouts. Treasuries: The Fed’s Treasury security holdings were reduced by $43.5 billion the week-ended May … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
Short-term Treasuries look attractive. The 1-month T-Bill offers a 4.67% yield. Beats cash and beats holding an equity index fund or ETF. I'm always a fan of owning Quality companies at an attractive price. However, I don't value equities as most investors do - I don't bucket stocks into "Value" "GARP" and "Growth" buckets. I … Continue reading Short-Term Paper, Quality Names and Gold
The 3.95% yield on the 10-Year Treasury is too low. The 10-Year Treasury yield assumes we are going back to a 0.00%-1.00% Fed Funds rate. We are not. We have far too much public debt ($31.5 Trillion) to encourage the type of debt issuance we experienced during COVID when the fiscal and monetary sides lost … Continue reading 10-Year Treasury Yield Has Upside
The Fed reduced its Treasury and Government Agency security holdings by $32.9 billion over the week ended November 30th. The Fed has reduced its balance sheet holdings by $79.7 billion over the last 4 weeks. Fed Balance Sheet – Treasuries: The Fed’s Treasury security holdings were $19.6 billion lower over the last week and $60.0 … Continue reading The Fed’s Balance Sheet Reduction (QT) Update
Why did Treasury Yields spike across the Yield curve from October 12th - October 20th? Look no further than the Fed's Balance Sheet. The Fed allowed $17.9 billion of Treasury Bills, Notes and Bonds to mature the week ended October 19th. Recall the Fed has dramatically shifted its strategy as it has transitioned from the … Continue reading QT Explains Treasury Yield Movements
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
It appears we were correct several weeks ago when we wrote that the Fed will maintain elevated interest rates for longer than markets expect. What are the repercussions for business? A persistently higher interest rate environment will expose hidden zombie companies much like the dry Paluxy River bed in Texas recently exposed dinosaur tracks. However, … Continue reading Higher Interest Rates & Growth
Speaking of a flattening of the yield curve, spreads between the 5 and 30-year Treasuries have not been this narrow since June 2007 (see chart below). Reach us at jmaietta@tek2day.com if you would like the Excel data behind the chart. Source: Treasury.gov; TEK2day.com. Click chart to expand.
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