Where Is The ‘Fed Put’? One Bank Answers The Big Question

Where Is The ‘Fed Put’? One Bank Answers The Big Question

Where is the Fed put? That's the question on the minds of market participants who have forgotten what it's like to operate in an environment where they are not the co-author of the monetary policy script. Going back at least to September 2015, Fed policy was shaped by a two-way communication loop with the market. The Fed only moved with the market's implied consent. That setup was the key determinant in encouraging the proliferation of the short vol. trade. That communication loop helped tran
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One thought on “Where Is The ‘Fed Put’? One Bank Answers The Big Question

  1. The lesson from 2008 was don’t wait too long because once it gets in motion is can literally end in the seizing up of the system. Powell has to reload the powder (which will limit the inflation build) while avoiding going too far and breaking the back of the markets. With the QE push for people to take more risk than they should have (or even know they have) added to the corp and govt leverage it is a precarious place. 2400-2500 seems about right but depends on how fast (how jolting) and what the data is (inflationary, wages, etc). All i know is Powell has a hard task ahead of him. I don’t envy him. Today though conditions remain too easy imo but that can change quicker than people think.

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