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aussiebear

World Stock Markets Trading Discussion - Jaded journey

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Darn. I totally missed that the rate on excess reserves is now 2.4%. Wow. Talk about a racket. 

All the ducks are in a row. The GSE's are going to be taken fully private again.  The war may be over but there is going to be a skirmish.  The Fed is going to be forced to stop running off their MBS portfolio I think.  $10bn a month isn't nothing  in a softening market.

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17 minutes ago, sandy beach said:

Makes me wonder if the current administration is doing the same thing with North Korea.

North Corea is totally overestimated. Like the Warsaw Treaty countries in the 80s. Truth was: Everything was rotten to the core.

But hey, Russia is overestimated beyond comprehension since over 100 years!  😂

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9 minutes ago, Jorma said:

Darn. I totally missed that the rate on excess reserves is now 2.4%. Wow. Talk about a racket. 

All the ducks are in a row. The GSE's are going to be taken fully private again.  The war may be over but there is going to be a skirmish.  The Fed is going to be forced to stop running off their MBS portfolio I think.  $10bn a month isn't nothing  in a softening market.

Sounds interesting. Could you please elaborate a little bit what this means for stocks performance?

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Excess reserves?  I am afraid to look how many billions for the big guys, if the number is to be found. Such things are not usually mentioned in polite company. The GSE's? Stocks have already gone way up I've heard. Paulson and other hedge fund  guys huge winners. MBS? General liquidity.

 

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45 minutes ago, DrStool said:

Nobody expects this rally to end here. Not even me. 

When this doesn‘t stop and reverse soon than we go to the ATH again which would mean that there never was a bear market. They would sell the Oct-Dec drop then as a short lived „FED mistake“.

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17 hours ago, fxfox said:

When this doesn‘t stop and reverse soon than we go to the ATH again which would mean that there never was a bear market. They would sell the Oct-Dec drop then as a short lived „FED mistake“.

Not unless rates rise. It's one or the other. 

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I don't know if you will see this Lee but I still have questions about the mechanisms of balance sheet shrinkage. Does the Fed in fact have an option not to redeem matured Notes? Or is that automatic?  When the note matures the Treasury returns the principal, period.?

I was under the impression it is a choice. If it isn't then they have to start QE again right?  Since the Note purchases started 10 years ago last month I figured some of them must have started to mature a couple of years ago. They were buying 7 year Notes too, right? Or did they start to mature so QT became a fait acompli in October 17?

It's funny that maintaining the MBS portfolio was not called QE. That's running down now as well. Maybe the Fed will reinstitute that first. Well that just complicates my question. First things first. Can the Fed hold Treasury Notes with out redeeming them, forever?

I sort of  asked this last week when  you  joked Powell went to the Treasury building with the notes and demanded payoff or he would break legs. That seemed to imply it was a choice on the Feds part to redeem or not.

Later I will ask why, or when, the Fed might get into the Bill market again. You know they have been talking about shortening the maturity of the portfolio yet nothing has been done. And by golly returning to the good old days when the Feds trading desk in NY put in a call to the dealers every morning asking what they wanted would seem to be a great option.

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They are redeeming maturing notes up to a total of $30 billion per month, subject to minor adjustment. That's essentially the language. 

A reversal from QT to QE without an interim period of slowing then stopping QT would require a crash of some sort.  

https://suremoneyinvestor.com/2019/02/heres-why-boffo-jobs-numbers-should-worry-you/

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