Era of cheap money not ending for least 2 more years (bonds, trading)
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How can this be possible? They say they are going to go with QT but at the same time the govt. debt and deficits are exploding, the supply of bonds is going to increase sharply while yields are going to remain the same? That makes no sense to me... what mystery buyer is going to buy all these bonds at low yields?
Since the Fed is talking about overnight rates here the long term rates (10Y/30Y) should still be moving up, so why is the stock market rejoicing?
what mystery buyer is going to buy all these bonds at low yields?
It's no mystery. The Federal Reserve is the buyer of last resort and the source of their wealth are the intaglio currency printing presses made by the German company KBA Notasys.
It's no mystery. The Federal Reserve is the buyer of last resort and the source of their wealth are the intaglio currency printing presses made by the German company KBA Notasys.
if they are the buyer of last resort then does it mean that their talk of QT is just a bunch of BS? I mean, if they are going to be *buyer* then being a *seller* at the same time makes absolutely no sense, so are they going to stop QT?
Looks like they have trapped themselves here... they absolutely cannot do QT as it will send interest rates higher and crash the market.
"In the outlook for short-term interest rates, Bullard remains in the cautious, dovish, minority at the central bank. “I have been a little bit concerned that the [Fed’s interest rate] committee goes too far, too fast,” Bullard said. He said his own forward guidance would be that rates stay where they are with some upside risks. Bullard is not a voting member of the Fed’s policy committee this year.
The stock market is going up because stock buy backs are at the highest rate in history. As long as there is cheap money, CEO goons are going to take advantage of it and buy back their own stock.
What's an easier way to make yourself rich if you're the CEO? I mean, you'd have to be an idiot not to engage in this with all the cheap money.
Just like you would have to be an idiot not to engage in insider trading if you're in Congress.
Unless of course people have morals. But we know they don't or else there would be some form of consolidated effort to make laws against it.
"In a note published overnight, Deutsche Bank credit strategist Jim Reid writes that 'rates and yields will continue to structurally move higher in the quarters and years ahead regardless of any short-term moves, and we hope policymakers won't be derailed by the inevitable macro issues that this will bring.'
While we will share some more details from this note, the first in a series of why Deutsche believes that global yields have nowhere to go but up, we wanted to highlight one chart which according to Deustche does not make any sense in the context of the ongoing debate of potentially lower yields: the projection of global debt to GDP forecasts for the next 30 years.
According to Reid, 'notwithstanding the short-term low supply expectations in Europe, a real head-scratcher going forward is how the market will cope over the years and even decades to come with the central case scenario of higher and higher government debt around the world. Figure 13 looks at the US, Germany and Japan government debt/GDP with forecasts from the US CBO and BIS.'"
A head-scratcher, huh???
I'm starting to believe this less and less. Guess they weren't kidding about the "population problem."
It's no mystery. The Federal Reserve is the buyer of last resort and the source of their wealth are the intaglio currency printing presses made by the German company KBA Notasys.
They may the Buyer of Las Resort, but the Treasury controls the actual printing presses ( and coin dies ), although the Fed places orders ....
In any case, the largest portion of the money supply is computerized and not printed paper.
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