So expect red even more for the rest of the week? The Fed will begin unloading T-Bills.
The Federal Reserve’s balance-sheet unwind is set to ramp up this week, which means the central bank will finally begin unloading the Treasury bills it started amassing almost three years ago.
As part of its broader plan to reduce its $9 trillion portfolio, the Fed will boost its monthly caps for the amount of Treasuries and holdings of mortgage-backed securities that it will let mature to $60 billion and $35 billion, respectively, while using its $326 billion stash of T-bills as filler when coupons run below the monthly level. September will be the first month that bills will be redeemed since coupons will fall below the monetary authority’s new cap.
The Fed’s portfolio has $43.6 billion of Treasury coupons maturing in September, which means that officials will need to let go of $16.4 billion of bills as well. It will also need to let another $13.6 billion run off in October. These will be the largest declines for the bill portfolio until September 2023.
There’s been keen interest in the Fed’s bill holdings due to the fact that the last time the monetary authority undertook so-called quantitative tightening it didn’t own any of the securities. It’s also critical for money-market traders who have been struggling to find assets in which to invest. They’ve largely opted to park excess cash at the reverse repurchase agreement facility, and a full rundown of the Fed’s Treasury bills would’ve provided investors with a jolt of supply.
The relative quitness that was there over the summer seems to be over. What the fed has done thus far has been inssuficient to combat inflation. They have to make a decission again (i refer to my 2 previous posts about this). Continue on the same pace and accept the inflation or take stronger measures.
The market seems to anticipate the later and the unloading of t-bills seems to confirm that. That would be bad news for the market in the coming months. But the situation remains pretty unpredictable and i am still not fully convinced the fed is in hawkish mode yet.
Good news! The Rail strike has been averted which would have destroyed any gains made for the past 2-3 years.
US railroads and unions reached a tentative deal early Thursday, a breakthrough that looks to avert a labor disruption that risked adding supply-chain strains to the world’s largest economy.
Nvidia has been performing worse than most.Must partially be due to Ethereum merge and the end of ethereum GPU mining, moving to ‘proof of stake’ (validators not miners).
Not good for their share price but positive for people looking to buy high end graphics cards.Far less energy intensive also.
Nvidia has been performing worse than most.Must partially be due to Ethereum merge and the end of ethereum GPU mining, moving to ‘proof of stake’ (validators not miners).
Not good for their share price but positive for people looking to buy high end graphics cards.Far less energy intensive also.
The producer price index for Germany is pretty scary.Producer prices jumped 7.9% in August, that’s just for the month.The year over year increase in producer prices in Germany is +45.8%.The acceleration is increasing faster as Russia cuts off gas and the Rhine river is too low to deliver coal to some power plants.
German producer prices rose by 7.9% in August, and were up 45.8% from a year earlier, statistics office Destatis said. Both figures were all-time records in the 83-year history of the Federal Republic and were well above analysts' expectations. Economists had expected the PPI to slow to only 1.6% on the month and 37.1% on the year.
Destatis said the biggest factor behind the development was the surge in electricity prices against a backdrop of increasing problems with output from France's fleet of nuclear reactors.
These are historically a big exporter of power, but have been dogged both by technical problems and, increasingly, a lack of water flow in France's rivers due to drought. Low water levels in Germany's rivers, particularly the Rhine, also made it nearly impossible to ship coal to power stations in the south of the country. This concern became particularly pressing as Russia all but stopped shipments of natural gas at the end of the month.
Energy prices as a whole were up by 139% from a year earlier and by 20.4% from July. Electricity prices in particular rose 175%. However, the increases weren't limited to energy: prices for intermediate goods rose 17.5% and prices for capital goods rose 7.8%, while durable and non-durable consumer goods rose 10.9% and 16.9%, respectively
I'm far from stock market expert, but one thing is predictable. Stocks rose before US Fed meeting and then they drop sharply afterwards. Always a good time to buy some stocks on discount. :D
Edit: Well, that discount didn't last for more than 30-60 minutes. I guess it was more or less priced in.
12% drop in one day for a bank that size is pretty crazy.
The housing market really shot up in Australia during Covid, Sydney median house price hit $1.3 million (US ~ 1 million), rates were dropped to record lows.Now, with the reserve bank hiking aggressively prices have already dropped 10%, Many fixed rate mortgages expire come January next year.More people are struggling with repayments.Reserve bank still needs to hike to control high inflation.Housing market (and thus construction industry) will crash, anyone can see this.Similar story in USA.
So it has the potential to be another 2008, Add in Russia/Ukraine, the energy crisis and the possible potential of China/Taiwan and it’s hard to predict what will happen.Hopefully it all works out.
Today the pound went up. I guess the spectacular drop of the pound in the past few days was the market anticipating this intervention. 10% drop->10% extra inflation (an oversimplification but not that far from reality). The 22% estimate for uk inflation in 2023 that i saw the other day is starting to make a bit more sense now.
EPT![[image loading]](https://preview.redd.it/uh02d54nnml91.png?width=1024&auto=webp&s=c9458a8e8275f0dcd3feb7c0f060be9f7a89cfb1)
![[image loading]](https://i.redd.it/frxd4hp6ueo91.png)
