US - Fed 04 (Apr 21 - Dec 25)

[behappyalways]

Policy makers have to worry about “the next inflation problem.”
If the economy continues to add more than 200,000 jobs a month without a large increase in the labor supply, “whatever labor market tightness you have now would look worse in six months.”
https://mobile.twitter.com/NickTimiraos ... 0679395333

January Payrolls Explode To 517K, 8-Sigma Beat To Expectations; Unemployment Rate Tumbles To Record Low
https://www.zerohedge.com/markets/janua ... les-record

[behappyalways]

The market is pricing an 18% prob of a 50-bps hike on March 22.

Yes, only 18%, well below 50%. But prob was literally ~0% a week or so ago.

https://mobile.twitter.com/biancoresear ... 0667819009

[winston]

Goldman Sachs now expects three more Fed rate hikes in 2023

Goldman Sachs said it now expects the U.S. Federal Reserve to raise interest rates three more times this year, by a quarter of a percentage point each, after data this week pointed to hot inflation and labor market resilience.

Meanwhile, money markets are currently pricing in a terminal rate of 5.3 percent by July.

Source: Reuters

https://www.thestandard.com.hk/breaking ... es-in-2023

[behappyalways]

Fed fund rate

100% of a 25 bps hike on March 22 to 4.75% to 5.00%. 21% of a 50 bps hike.
100% of a 25 bps hike on May 3 to 5.00% to 5.25%, 6% of 50 bps.
72% of a 25 bps hike on June 14, to 5.25% to 5.50%
29% of a 25 bps hike on July 26, to 5.50% to 5.75%.
All are the highest ever.
https://mobile.twitter.com/biancoresear ... 7251552256

Uh oh, Powell' new (invented) metric of "Core PCE services less Housing Services" soared in January to 0.58%.
As this chart shows, this is one of the highest readings ever.
Powell says this metric is 55% of core inflation. And it is highly sensitive to wage and labor.
https://mobile.twitter.com/biancoresear ... 4569521153

[behappyalways]

Kashkari Says Wage Growth Is Too High, Fed Can't Declare Victory Or There Will Be "Flood Of Exuberance"
https://www.zerohedge.com/economics/kas ... l-be-flood

[behappyalways]

On the issue that Fed cannot raise the interest rates too high else the US will not be able to service their debts ...

https://mobile.twitter.com/biancoresear ... 8366746624

[winston]

On the issue that Fed cannot raise the interest rates too high else the US will not be able to service their debts ...

I think that the Feds will always be able to service their debt.

The question is where are they going find another US$1t or so, to pay for the extra interest payments from the higher interest rates.

They could look for a way to print another US$1t (which is inflationary) but it would be inconsistent with their current QT program of trying to reduce US$4t from their balance sheet.

So I'm calling Powell's bluff but would probably have to hunker down for a few months before he starts to blink.

And how did we get into this inflation mess in the first place? It's because the Feds kept interest rates too low for too long, through their QE programs.

Having said that, I think it's good that interest rates is normalising. They have been pushing retirees to take on unnecessary risk through their QE program.

[behappyalways]

Fed Balance Sheet Explodes By $300BN As Bank Bailouts Lead To Record Discount Window Surge
https://www.zerohedge.com/markets/fed-b ... ndow-surge


Fed balance sheet rises by $297B
https://m.youtube.com/watch?v=KUMrwWn7dkQ

[behappyalways]

Illiquidity and not QE. As banks tighten, economic activities will further slow down....


As for the Banks - this will actually stop the Banks from lending and they will tighten their lending standards, so that they can increase liquidity organically from loans that get repaid. Goldman Sachs forecasts lending standards will tighten substantially after this.



https://www.ayeshatariq.com/p/the-feds- ... -window-is

Fed Balance Sheet Explodes By $300BN As Bank Bailouts Lead To Record Discount Window Surge
https://www.zerohedge.com/markets/fed-b ... ndow-surge


Fed balance sheet rises by $297B
https://m.youtube.com/watch?v=KUMrwWn7dkQ

[behappyalways]

Fed Panics, Announces "Coordinated" Daily US Dollar Swap Lines To Ease Banking Crisis
https://www.zerohedge.com/markets/fed-p ... ing-crisis