What’s everyone’s opinion on this event? What does this mean for the short term - medium term forecast on the market?
Translated into Nerry terms - repo’s going up, on a tuesday!
as buzz light year would say.
Q Enfinity and beyond!
Sounds like a non-event. The market has already recovered like nothing happened. The best guess is that it was just a temporary liquidity shortage as banks were hoarding regulatory capital or something.
In any case, this weird event pales in front of possible other economic concerns at the moment.
Does the fed usually fight the market like this though when short term rates spike? In other words, shouldn’t this have waited for an FOMC meeting? Like the one happening today? They going to backdoor QE on us? Why though. Isn’t the economy doing well enough?
Sooooo, what are the odds they leave rates “unchanged” to satisfy monetary policy in alignment with 10-year yields, but then start expanding their balance sheet via reverse repos to push cash in the market? asking for a friend. .
tendies
there is nothing wrong with keeping rates low. especially when everyone is doing it. its like drugs…
Ya, you’re right. Nothing says strong economy like negative interest rates.
I keep pounding the table on this, but people need to consider the effects of technology and flatlining working age population growth. It may be that we wind up in a future regime where per capita GDP growth is ok, but aggregate is declining and rates are negative or zero.
That said, demand is definitely weak and if you look at China FAI (CNFAYOY in BB) since like 2012 and chart it against public (CNFASTOH) and private (CNFAPITY) three of the last four years it has been propped up by public spending. Considering also that the combined FAI has slipped from >20% in 2012 to 5% in 2019 and their working age population is turning over as well as the fact that Europe runs a significant trade surplus linking them with China, there are good reasons to question demand over a more near term horizon.
- The Federal Reserve conducted a repurchase operation Tuesday involving $53 billion worth of various debt instruments as it seeks to control the level of its benchmark interest rate. Gundlach said the central bank will see the “repo” move as a “warning sign” and will resume expansion of its balance sheet.
- “The freeze-up can only be viewed as a negative,” Gundlach said. “They are baby-stepping their way to doing QE.”
- The Federal Open Market Committee will announce their decision on interest rates on Wednesday. Gundlach said he expects the Fed to cut rates by a quarter point.
- Gundlach, a respected markets forecaster, oversees $130 billion of assets under management at DoubleLine, according to its website.
- “It’s not a great idea to bet on low interest rates,” Gundlach said in an investor webcast on Tuesday.
- When asked if he would buy 10-year Treasury now, Gundlach said “absolutely not.”
- The so-called bond king also said the Fed will see the “repo” move as a “warning sign” and will resume expansion of its balance sheet.
- DoubleLine CEO Jeffrey Gundlach believes the bottom for interest rates is in for 2019.
- Growing fears about a possible global economic slowdown prompted Treasury yields to hit their historic lows a few weeks ago. The so-called bond king said yields won’t go any lower this year. That was the bottom for the 10-year Treasury yield, he said.
- “It’s not a great idea to bet on low interest rates,” Gundlach said in an investor webcast on Tuesday. When asked if he would buy a 10-year Treasury now, Gundlach said “absolutely not.”
- The yield on the benchmark 10-year Treasury breached below 1.5% in August, while the 30-year Treasury bond yield fell below 2% for the first time ever as the U.S.-China trade war escalated.
This guy does nothing but contradict himself.
Jerome Powell, 7/31/2019: It’s not the beginning of a long series of rate cuts.
His credibility will be tested in just 40 minutes.
For those of you who watch this type of stuff, the past speeches where Jerome Powell has gone off script, especially during the press conference, the markets have not liked it.
Today, with his tendency to spook the fixed income markets with off the cuff comments or plain avoidance (watch December 2018), I would not be surprised if he is ill-prepared to answer the questions which will be raised about the Repo issue which just happened. I would be surprised if he offers any solace, comfort, or clear message which the markets take without overreacting.
Seat backs up, tray tables in their up and locked position, and fasten your seatbelts.
Repo issue is nothing but a bunch of plebs who can’t see the forest through the trees.
Please elaborate by what you mean markets didn’t like it - you mean equity markets? Bond markets? The dollar LOVED what Powell said in his last press briefing.
i mean technically how low can you go. imo these negative rates are not permanent. only a retard would buy a negative rate bond by itself.
Things the FED hates doing: Whipsawing markets. Full court press that they leave rates unchanged. Sell the Euro. Buy the dollar.
It’s just fake money anyways if I lose.
RIP
Haha. But I made money - sure I was dead wrong on my prediction but the dollar strengthened.
no way, gundlach is awesome
Last time Powell spoke, he spoke the 2s10s right into an inversion as the example I had at my fingertips. But thinking back to December 2018, when he seemed to completely miss the point about inflation questions he talked the 10y off the cliff.
You’re likely right about hte Repo issue but the Fed bungled managing it and had he further bungled it with slipshod comments, it would have added greater discomfort to the entire conversation. But, this one was boring and he stuck pretty closely to a script it seems. He seems to manage to say very little…perhaps that was his plan.
Still, he may be William Miller v2