Jump to content

Being Right Means Never Having to Say You're Sorry 7/12/23

Rate this topic


Recommended Posts

As a prognosticator, I know all too well that saying, "I told you so," is a sign of hubris that will come back to haunt you. Because the feeling usually sets in right around the time that the market is about to bite you in the ass. 

Why am I writing this now? No reason. 

I'm now in an apartment in Malmo, Sweden because Bruce Springsteen drove hotel room prices to the equivalent of his concert tickets just across the Oresund in Copenhagen. I arrived in Copenhagen by ferry from Oslo this morning. And, as forecast, it was smooth sailing. Now that I am safely off the boat and on dry land... well, not dry, but land... Where was I? Oh right, smooth sailing. See, I told you it would be. Great big ship cuts through choppy waves like a hot knife through soft buddah. 

So now, the ES 24 S&P fucutures are sitting on the verge of another base breakout on the hourly chart. If it clears 4460, the conventional measured move target would be 4540. The current 5 day cycle wave has a projection of 4460. That makes the idea of a breakout a maybe, maybe not on this move. But even if it fails, if the index sticks around 4435 or more over the next couple of days, then more upside would become likely. 

Wait. WTF, just happened?

10nanb

 Buyback Schmieback. 

12 hours ago, potatohead said:

It's a joke. They're buying back with one hand and issuing with the other. They're simply flipping maturities. Doesn't change the amount of money in the system one iota. It's another name for Operation Twist. But why? They'll exchange low cost debt for high cost? 

I have no idea what they hope to achieve. 

Maybe it's a back door insurance and pension fund industry bailout. I don't know. 

For moron the markets, see:

If you are a new visitor to the Stool, please register and join in! To post your observations and charts, and snide, but good-natured, comments, click here to register. Be sure to respond to the confirmation email which is sent instantly. If not in your inbox, check your spam folder.  

My travel photo blog 

Link to comment
Share on other sites

I think the buyback is a sign they want to keep long rates from rising higher and offering short term debt  allows this debt to be collateral for financing to buy more assets.  Does it make sense....no. However if one is trying to extend the life of leverage, they can only offer what institutions are will to buy or better yet...lend against.

This is not our father's markets anymore.

Link to comment
Share on other sites

5 minutes ago, potatohead said:

I think the buyback is a sign they want to keep long rates from rising higher and offering short term debt  allows this debt to be collateral for financing to buy more assets.  Does it make sense....no. However if one is trying to extend the life of leverage, they can only offer what institutions are will to buy or better yet...lend against.

This is not our father's markets anymore.

Swapping lower yielding debt for higher yielding debt doesn't change the quality of the collateral. 

Institutions will buy anything at the market price if they have the cash. But what institutions hold cash? Insurers? Pension funds? Banks have less and less of it because of QT. So from the standpoint of monetary trends, this gambit won't work for as long as the Fed remains in the QT business. 

 

Link to comment
Share on other sites

2 minutes ago, DrStool said:

Swapping lower yielding debt for higher yielding debt doesn't change the quality of the collateral. 

Institutions will buy anything at the market price if they have the cash. But what institutions hold cash? Insurers? Pension funds? Banks have less and less of it because of QT. So from the standpoint of monetary trends, this gambit won't work for as long as the Fed remains in the QT business. 

 

Very strange. One would think if yields hit a generational bottom, a borrower would want to lock in their borrowing costs for as long as possible. Not shorten it.

Link to comment
Share on other sites

4 minutes ago, DrStool said:

It would matter if they take supply out of the market. But as long as the USG runs a deficit, that ain't happening. 

seems to me there is either an issue with liquidity/demand for longer term dated Treasuries, want to keep mortgage rates down by influencing the longer rates, or institutions (pensions) are saying we need short term paper because they see redemptions coming from the baby boomers  in retirement years.

The Treasury seems to have taken on a monetary policy role once reserved for the Fed.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
  • Tell a friend

    Love Stool Pigeons Wire Message Board? Tell a friend!
  • Recently Browsing   0 members

    • No registered users viewing this page.
  • ×
    • Create New...