The Fed's interest expenses exploded higher in 2022. They have been operating at a loss since September and might not return to profitability until 2026.... Read More
Developed market central banks are hiking in a synchronous fashion unlike any time in at least a couple decades.... Read More
How big are the Fed's holdings of bonds, notes, bills, TIPS, MBS, agencies, and FRNs in relation the outstanding market?... Read More
A 25 basis point hike is almost universally expected at the February 1 FOMC meeting. Traders still expect an additional 25 basis point hike at the March meeting, but there is a small chance of a pause.... Read More
Updating the changes in central banks' balance sheets... Read More
The Fed is a benevolent dictatorship. The Chairman gets what the Chairman wants. Not all members of the FOMC agree with Powell. We believe this is leading to the market misinterpreting policy.... Read More
Wednesday's FOMC press conference is going to be unusual. Powell will have to address not only inflation, but the Timiraos story about a Fed stepdown.... Read More
How big are the Fed's holdings of bonds, notes, bills, TIPS, MBS, agencies, and FRNs in relation the outstanding market?... Read More
In the week ending October 12, the Fed paid out over $4 billion more in interest expenses than it received in interest income. As the Fed continues to hike rates, these weekly losses will only grow larger.... Read More
Developed market central banks are hiking in a synchronous fashion unlike any time in at least a couple decades.... Read More
With all eyes on the expansion of Quantitative tightening (QT) in September, the Federal Reserve's reverse repo facility is an essential piece to understanding how the Fed can potentially enact a smooth balance sheet reduction schedule.... Read More
Over the past six months the Fed has raised rates 275 basis points, the fastest pace since 1981.... Read More
The Federal Reserve has embarked on a historic tightening cycle to rein in inflation. The combination of rate hikes and quantitative tightening will continue to restrict financial conditions. The effect of rate increases is relatively known, while the effect of large-scale reductions of the balance sheet remains relatively unknown.... Read More
Even as the Fed ramps up the Treasury portion of their monthly QT runoff to $60B per month, they will not have to actively sell any notes or bonds until after 2024.... Read More
The Fed operated profitably as rates remained subdued. With rates now rising, the math quickly begins to work against them.... Read More
How big are the Fed's holdings of bonds, notes, bills, TIPS, MBS, agencies, and FRNs in relation the outstanding market?... Read More
Updating the changes in central banks' balance sheets... Read More
Yesterday Chairman Powell signaled "forward guidance" is effectively over and the Fed will now react to data. This sets the stage for another 75 basis point hike in July, with even more hikes after that.... Read More
Updating the changes in central banks' balance sheets... Read More
Questions about the Fed's resolve remain. This is at the heart of the debate in the market today.... Read More