Posted on 01/09/2023 6:54:50 AM PST by Kaiser8408a
Zoltan!
The Federal Reserve will be the backstop of the Treasury market this year to alleviate dysfunction resulting from its increasing size and the retreat of regular buyers.
That’s the view of Credit Suisse Group AG analyst Zoltan Pozsar, who in a note to clients Friday predicted the Fed will restart asset purchases during the summer of 2023.
In Pozsar’s analysis, relative-value funds won’t buy Treasuries unless they cheapen a lot relative to overnight index swaps, and banks with sagging reserves are more likely to tap the funding markets than to buy Treasuries. FX-hedged buyers have been “priced out,” and geopolitical events have reduced large reserve managers’ appetite for US debt, he said.
Flagging demand from marginal buyers will depress demand for Treasury auctions, sparking selloffs in equities, credit and emerging markets, according to Pozsar.
“This is a ‘checkmate-like’ situation,” he wrote. “The Fed won’t be a pivot and the terminal rate may have to go higher still, neither of which augurs well for either risk assets or Treasuries.”
As The Fed started to raise rates (yellow line) to fight inflation (blue dashed line), the S&P 500 index started to fall. Note that The Fed’s balance sheet (purple line) is mirroring the inflation rate.
Fed Funds Futures point to Zoltan’s reversal in June 2023.
Will The Fed pivot? Zoltan says yes, the talking Fed heads say no.
A rare glimpse into The Fed’s open market committee meeting.
(Excerpt) Read more at confoundedinterest.net ...
Sound like they believe the Whoppers coming out of the Bureau of Labor Statistics.
The last 5 years, Credit Suisse stock is down over 82%.
Insanity: Doing the same thing over and over and expecting a different result each time.
BOHICA!..........................
Are they doing itsy bitsy spider while wearing bubble wrap?…
Unless they are not expecting different results. Devalue America at our expense.
Thats the zoltan secret sign
I predict they pivot by March.
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