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Fed's Bond Market Tragedy Was Predictable and Predicted 9/28/22

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FT: It has been a very long time since we have seen a G7 economy experience what the UK has in the past six days — disorderly moves in its currency and bond markets, a loss of confidence in policymakers, direct central bank intervention in the government bond market, pressures for an emergency rate rise, and a warning from the IMF. -- Mohamed El-Erian



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Mohamed El-Erian on Bloomberg: We thought the end of easy money would difficult involving a balance between inflation and recession but we found the result was financial risk. Central banks are now contributors to volatility. Central banks can no longer offer extended Q/E because of inflation. Central banks can not pivot due to changes in inflation metrics – that will take time. If they pivot it will be due to recession or financial market risk.

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„What it sounds like isn't direct pension bond holdings but a pension (or pensions) with investments in a fund that would have blown up today without a BOE bailout.

Whatever it was, it was bad enough to send the BOE into action. Of course, this is also the kind of thing you'd leak if you were looking for cover -- no one wants to see pensions hurt.“
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What about those Special Drawing Rights. One way or another they are going to have to come up with some money or near money to calm things down.

Don't forget the war, as low level as it seems to be. The CB's have to support governments during wartime. Just saying as a general thing.

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