Tuesday , November 5 2024

QT

Summary:
We can’t forget this QT is still happening in the background too… in view of S&Ps recovering back to a old 2 year high this week…Fed steadily keeps working this balance down and it at least takes some reserve asset pressure off “money center” banks that have ample/excess reserves… This “unprinting money!” is supposed to be bearish according to monetarists… yet equity index values are currently back to all time highs after a 2 year hiatus…Concomitant the daily RRP sub-account is being reduced… daily RRP account balance is down to 0B having been .3T a year ago …. but still any non zero RRP balance means reserve assets are flowing towards banks that don’t have the regulatory capital to posses them and accordingly have to figure out how to divert them or otherwise apply reduced values to

Topics:
Mike Norman considers the following as important:

This could be interesting, too:

Jodi Beggs writes Economists Do It With Models 1970-01-01 00:00:00

Mike Norman writes 24 per cent annual interest on time deposits: St Petersburg Travel Notes, installment three — Gilbert Doctorow

Lars Pålsson Syll writes Daniel Waldenströms rappakalja om ojämlikheten

Merijn T. Knibbe writes ´Fryslan boppe´. An in-depth inspirational analysis of work rewarded with the 2024 Riksbank prize in economic sciences.

We can’t forget this QT is still happening in the background too… in view of S&Ps recovering back to a old 2 year high this week…

Fed steadily keeps working this balance down and it at least takes some reserve asset pressure off “money center” banks that have ample/excess reserves… 

This “unprinting money!” is supposed to be bearish according to monetarists… yet equity index values are currently back to all time highs after a 2 year hiatus…

Concomitant the daily RRP sub-account is being reduced… daily RRP account balance is down to $600B having been $2.3T a year ago …. but still any non zero RRP balance means reserve assets are flowing towards banks that don’t have the regulatory capital to posses them and accordingly have to figure out how to divert them or otherwise apply reduced values to other assets they posses… but at least this daily RRP amount has been significantly reduced over the past year…

Fed has no stated plans to modify the current QT policy…




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.

Leave a Reply

Your email address will not be published. Required fields are marked *