The Fed Wants to Drive QT as Far as Possible Without Blowing Stuff Up, and it’s Working on a Plan: FOMC Minutes by Wolf Richter • Feb 22, 2024 • 121 Comments QT-1 blew up the repo market. This time around, the Fed wants to avoid that type of debacle so it wouldn’t have to “prematurely” end QT-2.
Higher for Longer Inflation & Interest Rates Not Over Until the Fat Lady Sings? Waiting for the 2-Year Treasury Yield to Overshoot by Wolf Richter • Feb 18, 2024 • 214 Comments Four decades of history say it’s not over until the 2-year yield overshoots the EFFR. It has undershot for a year, and inflation is taking off again.
Fed Balance Sheet QT: -$1.34 Trillion from Peak, to $7.63 Trillion, Lowest since March 2021 by Wolf Richter • Feb 1, 2024 • 94 Comments The Fed shed 33% of the Treasury securities it had added during pandemic QE and 24% of the MBS.
Here’s my Powell Cocktail, Not Quite in his Own Words by Wolf Richter • Jan 31, 2024 • 147 Comments It’s premature to think rate cuts are right around the corner, we haven’t decided anything yet, it’s meeting by meeting, but in March no way Jose, I mean, that’s not my base case.
Wow, Fed’s Statement Pushes Back against Rate-Cut Mania and End-of-QT Mania. Holds Rates at 5.50% Top of Range, QT to Continue as Planned by Wolf Richter • Jan 31, 2024 • 134 Comments Ok, so that push-back in the statement was unexpected.
“Effective Immediately,” Fed Shuts Down Arbitrage Opportunity with the Bank Term Funding Program (BTFP) by Wolf Richter • Jan 24, 2024 • 134 Comments This is funny, in a central-bank kind of way.
Fed’s Balance Sheet QT, Liabilities: RRPs -$1.78 trillion from Peak, to $590 Billion, but Reserves Rise to $3.6 Trillion as Liquidity Drains and Shifts by Wolf Richter • Jan 19, 2024 • 106 Comments RRPs heading to their normal level of zero. And it’s time to talk about the revived Standing Repo Facility.
Fed Reports Operating Loss of $114 billion for 2023, as Interest Expense Blows Out by Wolf Richter • Jan 12, 2024 • 125 Comments On top of whatever unrealized losses ($1.3 trillion in Q3) from its securities holdings. But losses don’t matter to the Fed.
The BTFP Will Expire in March: Fed Vice Chair for Supervision Michael Barr by Wolf Richter • Jan 9, 2024 • 80 Comments Last remaining bailout tool from the March bank panic goes away. Current arbitrage may have been a factor in shutting down this baby.
Fed Balance Sheet QT: -$1.28 Trillion from Peak, to $7.66 Trillion, Lowest since March 2021. Banks Got an Arbitrage Opportunity when Yields Dropped by Wolf Richter • Jan 4, 2024 • 81 Comments The Fed has shed 31% of the Treasury securities it had added during pandemic QE.
