Fed: Stop Selling Treasurys Into An Illiquid Market
The Fed on Tuesday announced yet another new facility to help foster stability in the global financial system, amid what might very fairly be described as one of the worst international crises since World War II. In a statement, the Fed unveiled a temporary repo facility with foreign central banks and international monetary authorities. This is necessary, the Fed says, to ensure "the smooth functioning" of markets "including" the UST market, traditionally the deepest, most liquid market on the
3 thoughts on “Fed: Stop Selling Treasurys Into An Illiquid Market”
I tend to think this currency intervention is going to be perceived as a clear step in longer term currency war, which will be seen as currency manipulation, which could result in global disinflation, and greater instability during a period if recovery. However, the Fed may just be pulling out all the stops and tossing every possible life raft available? It’s also increasingly ironic that not too long ago, the Fed and market paparazzi were hoping their illusion of global synchronized growth, which apparently was tied to the Achilles’s anchor of a global dollar shortage, which didn’t seem to ever resolve, until now??? Why does this virus war play so easily into Trump’s waiting small hands? The virus has become a perfect policy tool to lower the Dollar and take interest levels to zero, not to mention Powell doing everything possible to make the king’s wishes into socialist programs that make Bernie look like he was way behind the curve! Now if can just get Powell to do something really proactive about student loans and healthcare, then really piss off Elizabeth Warren. Why even have an election?
this isn’t “currency intervention”.
Snider on non intervention
FIMA doesn’t change anything. Instead of selling UST’s like foreign central banks would be doing they’ll now repo them to the Fed — ending up in the same way as other countries had been using dollar swaps. Did the swaps work? No, of course they didn’t.