TEK2day

Operating at the Intersection of Technology and the Capital Markets

    Tag: Treasury yields

    • What Will Fed Chair Powell Say Friday In Jackson?

      Powell probably will not say a lot. We have another CPI print coming on September 13th. The Fed swears that it is data-dependent. Therefore, why lean dovish or hawkish?

    • 10 Year Treasury Yields Will Move Higher

      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.

    • What If Powell Takes Away The Zero Bound?

      The 10-year Treasury yield has room to move significantly higher, especially if Powell takes away the zero bound. I would not be shocked to see an 8% yield on the 10-year Treasury should Powell remove the zero bound. The 10-year Treasury yield sits at approximately 4.1% and has been range-bound since the beginning of the…

    • Tough Month For Banks

      Tough month for bank stocks. Not a surprise when 3 month T-Bills yield 5%. How many depository institutions can compete at that rate level? Will the Fed blink? If JPM and GS shares crater – Yes. Otherwise, probably not. Also, as we wrote last night, SIVB may have a new owner come Monday.

    • 10-Year Treasury Yield Has Upside

      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…

    • The Market Does Not Get It

      January Headline CPI increased at an accelerated rate (0.5%) and Core CPI increased by the same month-to-month rate (0.4%) as December’s increase. Food prices increased at an accelerated rate (0.5%) and Energy prices increased (2.0%) after having declined for the two previous months. Inflation is proving to be sticky (as we predicted in April 2021).…

    • Tomorrow’s CPI = Noise

      Regardless of where CPI lands tomorrow, my view is that the Fed will hold rates higher for longer than the market believes. Higher interest rates combined with a shrinking money supply (QT), translates to: tighter monetary conditions, a higher cost of capital, less revenue visibility for companies, more employee layoffs and a deeper recession. The…

    • The Fed’s Balance Sheet Reduction (QT) Update

      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.

    • How To Crash The Economy

      The simple formula for crashing the economy is to shrink the monetary base (cash in circulation plus reserves) while raising interest rates. The chart below plots the monetary base (down 15% year-over-year) against the 10-year Treasury yield (up from 1.56% to 3.98% over the past year). We are all but guaranteed a deep recession should…

    • QT Explains Treasury Yield Movements

      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…