Stealth QE: Today the US #Treasury auctioned 3 year Treasury Bonds. They tried to sell $150b but only sold $78b.
Look at the Fed line item SOMA, this is the Fed buying $20b themselves.
https://t.co/z71p8qXezk https://t.co/kZ7Tb0uTO8
Stealth QE: Today the US #Treasury auctioned 3 year Treasury Bonds. They tried to sell $150b but only sold $78b. Look at the Fed line item SOMA, this is the Fed buying $20b themselves. https://t.co/z71p8qXezk https://t.co/kZ7Tb0uTO8
America, China, and the Death of the International Monetary Non-System - American Affairs Journal
Russell Napieramericanaffairsjournal.org
The story going into FOMC tomorrow: The Fed needs to lower rates because the US needs to roll over $8-9 trillion of debt in 2025.
Rolling over $8-9 trillion at 2025’s higher rates (e.g., 4-5% vs. 1-2% pre-2022) increases interest expenses, projected at $1.1 trillion for 2024 and rising. This crowds out other spending, as interest now exceeds milita... See more
Rolling over $8-9 trillion at 2025’s higher rates (e.g., 4-5% vs. 1-2% pre-2022) increases interest expenses, projected at $1.1 trillion for 2024 and rising. This crowds out other spending, as interest now exceeds milita... See more
MartyParty • Tweet
Back during the 2010-2014 period in particular, the Fed was buying Treasuries as a somewhat optional way to boost the wealth effect, provide extra liquidity, and recapitalize the banking system.
Lyn Alden • May 2024 Newsletter: The Bond Market Is the “Dumb Money” Now
Looking from this perspective at the U.S. deficit, by far not all of the credits borrowed by the government were financed by the Fed. According to preliminary and rough estimates, not 40 percent but “only” about 13 percent of U.S. expenditures are presently financed this way. Moreover, in discussing this problem it has to be taken into account that
... See moreJonathan Tepper • Endgame: The End of the Debt SuperCycle and How It Changes Everything
Transition to QT Framework: QT is about reversing QE’s excesses and restoring balance-sheet normalcy.
QT 1.0 mostly let the portfolio “run off” (without reinvestment) but was muted by Treasury issuance patterns.
QT 2.0 takes a more active role—it seeks not only to shrink the balance sheet but also to alter its composition by favoring short-term reinv