Traders Brace For Macro Thriller As Huge Week Looms
It's a hectic week for the macro community.
A daunting bevy of data, including top-tier releases covering the US labor market, will collide with a closely-watched Treasury refunding announcement and policy meetings from the Fed, Bank of England and BoJ to create a nonstop flow of ostensibly tradable headlines.
For those interested in a preview of the policy meetings, you're encouraged to peruse the linked article above. Suffice to say the Fed will be on hold, the Bank of Japan may (but almost
a wise man once said this is all fantasy, meaningless bullshit….i don’t remember if it was walter white or jesse pinkman…….
As inflation recedes slowly, equity investors hoped that the FED would ease monetary policy. However, is it fair to say that profligate fiscal policy requiring a relentless deluge of US Treasuries issued into a market of only price sensitive buyers…has made FED interest rate policy less relevant. Since the deluge of US Treasuries issued has no end in sight, then longer duration Treasury rates will remain elevated. So is it fair to say that inflation and interest rate policy have become yesterday’s news. Fortunately, the FED has the facility to buy Treasuries that are underwater from banks in a kind of “covert QE”. I’m hoping the banks have the alacrity to use this facility rather than being complacent. Wouldn’t it be interesting to compare how much of this “QE” has increased FED balance sheet vs the official QT effects reported. Also, as lower interest paying Treasuries mature and are rolled into higher interest bonds, we will probably reach in 2024 the gut-punch where US Treasury is annually paying $1 trillion in interest alone. Will that widen the wealth gap between Treasury holders vs every one else ?? Oh well, just raise taxes on interest income says the Vox Populi. Yet the price sensitive bond buyer will say they require a competitive rate of return after taxes to purchase the bonds.
LFG