Ventodivino
מגן ולא יראה
Noway,
se è del bazookone della FED che vuoi sapere, qui ci sono i trilioni (come Paperon de' Paperoni).
Ritorno con : Che Iddio salvi lo SP500 !
Thankfully, the Fed has stepped in. Late Thursday the NY Fed brought an aircraft carrier to a knife fight. The USD60bn bill-purchase program was broadened beyond bills to include USTs & TIPS, making the current POMO program even more QE-like. The NY Fed said "terms of operations will be adjusted as needed to foster smooth Treasury market functioning and efficient and effective policy implementation". This suggests the purchase program will go on for as long as needed. Due to dislocations in the US Treasury market, any "tapering" of the POMOs in Q2 has accordingly become much less likely. The NY Fed also massively increased the amount of liquidity it will provide to the market via repos. It started with USD500bn in a 3m repo operation, but take-up was limited (perhaps because banks was not given enough time). Today the Fed continues with another trillion (USD500bn 3m repo, and a USD100bn 1m repo), and summarising the repo operations coming weeks the NY Fed will be offer a sum total of USD5.5 trillion of liquidity by early April(!). The Fed’s balance sheet will likely surge to a new record size. In theory the size could almost be about to double (it won’t).
As a result, we expect improved functioning of the US Treasury markets (changes to POMO operations suggests narrowing UST/OIS spreads). NY Fed making the POMO program more QE-like suggests wider break-evens (they usually do so during QE programs). To make this 100% QE-like, rates will need go drop to zero, which they might do within a week's time. These moves should also make it more attractive to buy US Treasuries. On our models the US 10y yield could head close to zero (<30bp as global PMI is about to crash and Fed is about to cut deeply, not to mention if the Fed decides to go for full yield curve control at some point). While these moves reduce some nasty tail risks, they do not solve the underlying problems: i) component shortages, ii) unknown & large demand/output shortfalls, causing iii) a negative impact on credit markets & labour markets causing a downward spiral and a new recession.
se è del bazookone della FED che vuoi sapere, qui ci sono i trilioni (come Paperon de' Paperoni).
Ritorno con : Che Iddio salvi lo SP500 !
Thankfully, the Fed has stepped in. Late Thursday the NY Fed brought an aircraft carrier to a knife fight. The USD60bn bill-purchase program was broadened beyond bills to include USTs & TIPS, making the current POMO program even more QE-like. The NY Fed said "terms of operations will be adjusted as needed to foster smooth Treasury market functioning and efficient and effective policy implementation". This suggests the purchase program will go on for as long as needed. Due to dislocations in the US Treasury market, any "tapering" of the POMOs in Q2 has accordingly become much less likely. The NY Fed also massively increased the amount of liquidity it will provide to the market via repos. It started with USD500bn in a 3m repo operation, but take-up was limited (perhaps because banks was not given enough time). Today the Fed continues with another trillion (USD500bn 3m repo, and a USD100bn 1m repo), and summarising the repo operations coming weeks the NY Fed will be offer a sum total of USD5.5 trillion of liquidity by early April(!). The Fed’s balance sheet will likely surge to a new record size. In theory the size could almost be about to double (it won’t).
As a result, we expect improved functioning of the US Treasury markets (changes to POMO operations suggests narrowing UST/OIS spreads). NY Fed making the POMO program more QE-like suggests wider break-evens (they usually do so during QE programs). To make this 100% QE-like, rates will need go drop to zero, which they might do within a week's time. These moves should also make it more attractive to buy US Treasuries. On our models the US 10y yield could head close to zero (<30bp as global PMI is about to crash and Fed is about to cut deeply, not to mention if the Fed decides to go for full yield curve control at some point). While these moves reduce some nasty tail risks, they do not solve the underlying problems: i) component shortages, ii) unknown & large demand/output shortfalls, causing iii) a negative impact on credit markets & labour markets causing a downward spiral and a new recession.
