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FED’S MESTER: WE WANT TO SEE US RATES ABOVE 4% NEXT YEAR.

Summary:
Banks have T of regulatory required reserve assets getting IOR and .5T of regulatory required HQLA govt securities... if they get this 4% minimum on this .5T of regulatory assets (QT will albeit reduce this slightly by then) that would be 0B annual in revenues to US banks for doing nothing other than complying with government regulations….  Up from 0 at ZIRP very recently…And Fed has over T in RRP paying about the same rate so that would be another B annual to somebody…. Then there all the T-Bills somebody has…Would be a major positive fiscal adjustment… probably near T annual or so…FED'S MESTER: WE WANT TO SEE US RATES ABOVE 4% NEXT YEAR.— Breaking Market News ⚡️ (@financialjuice) June 29, 2022

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Banks have $3T of regulatory required reserve assets getting IOR and $4.5T of regulatory required HQLA govt securities... if they get this 4% minimum on this $7.5T of regulatory assets (QT will albeit reduce this slightly by then) that would be $300B annual in revenues to US banks for doing nothing other than complying with government regulations….  Up from 0 at ZIRP very recently…

And Fed has over $2T in RRP paying about the same rate so that would be another $80B annual to somebody…. Then there all the T-Bills somebody has…

Would be a major positive fiscal adjustment… probably near $1T annual or so…







Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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