If ‘QE-Lite’ Reignites Classic QE Trade, Fade It, Goldman Says

If ‘QE-Lite’ Reignites Classic QE Trade, Fade It, Goldman Says

Over the weekend, we recapped September's epic short-term funding squeeze and made a few comments about what's likely coming next from the Fed in light of this month's dramatics. The unwelcome chaos in the repo market gave short-end rates strategists a rare moment in the spotlight, compelled the Fed to respond with emergency liquidity injections and forced the financial punditry to don their money market expert hats and pretend to care about something they know is important but want absolutely
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2 thoughts on “If ‘QE-Lite’ Reignites Classic QE Trade, Fade It, Goldman Says

  1. An additional $200BN price-insensitive buying of UST in 3-4 months, plus the next 25 bp cut (surely the Fed is not doing to withhold a
    cut in October of all months) seems likely to depress yields. I’m not seeing the trenchant argument for fading this not-QE, at least not on the fixed income side. On the equity side, I think it remains all about trade.

  2. The market doesn’t care and probably doesn’t even understand the nuance and semantics. When the Fed backs off after reaching the target level the market will be shocked as always.

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