All Macro-Thematic Trend Reports:

The Fed quietly grew its balance sheet by $180B in February as 10y yields rose; did YCC already begin? (FFTT, 3/4/21)

The Fed has been saying it would grow its balance sheet by “at least $120 billion per month.” In February, the Fed’s balance sheet grew $180 billion, well above the Fed’s $120 billion per month minimum target. What is the difference between Yield Curve Control (YCC) and the Fed flexing its monthly balance sheet purchases up by 50% v. stated minimum targets during times of UST market stress?  In our view, merely semantics. If we’re

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 2/26/21)

“Powell made it clear the Fed is nowhere close to tapering QE, even while predicting GDP growth of as high as 6%” (page 2) Policymakers have long planned to “liquidate” sovereign debt holders on a real basis – has the process started? (page 3) “The worst 7-year UST auction in history?” (page 4) US commercial bank lending to the US government up 30%, but total US commercial bank lending up only 2.5% (page 5) “Reserve

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Epiphany: Stimulus size is not about where we stand on COVID, it’s about inflating government debt away (FFTT, 2/25/21)

Multiple economists (Larry Summers, Brian Wesbury, others) have come out to say the proposed Biden stimulus package is too big relative to the underlying needs given the ongoing COVID recovery. Despite the objections of these economists, Fed Chair Powell, Treasury Secretary Yellen, and Pres. Biden appear to remain committed to aggressive stimulus in 2021.     Then it hit us: The size of the stimulus bill is not about where things stand on COVID, it is

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 2/19/21)

ROSENGREN: IF INFLATION BECOMES A PROBLEM, “THE FED WILL TAKE CARE OF IT” (page 2) Inflation already appears to be breaking out in spades, and it may be stickier than consensus believes (page 3) “President Biden and his top economic advisers are brushing inflation warnings aside, as is Fed Chair Powell” (page 5) Two weak long-dated UST auctions in a row, on the heels of rising inflation and promises of more stimulus (page 7) “A

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Rapidly-worsening US fiscal problem causes disruption in US money markets… Part Deux (FFTT, 2/18/21)

There is an increasing amount of discussion taking place about potential money market disruptions due to the US Treasury running down the Treasury General Account (TGA), which could potentially drive short-term UST yields to go negative. As in September 2019, the key underlying issue behind money market disruption continues to be ignored by most analysts and financial media, but is highlighted in one simple chart below: The US has been forced to finance a significant

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 2/12/21)

Arguably the most important macro chart we’ve seen in some time (page 2) UST markets have already been quietly hinting that the long end of the UST market has a demand problem (page 3) “America went on a borrowing binge, but banks were left out as loan books shrink for 1st time in decades” (page 5) US 5-year US breakeven inflation rate hits 10-year high; ensuing record-sized 30y UST is “ugly” (page 7) One of

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