Wednesday 29 January 2020

The Fed inverts the curve deliberately?

The FOMC was supposed to be a snoozefest. 
But the FOMC hiked IOER to 1.6%, which is more yield than most of the o/s Treasury stock, which the primary dealers have to buy if you want to sell... Err, what?!?
Isnt this what happened in Sept/ Oct? - which forced 3 rate cuts and not-QE4 to avoid a crash?

On the other hand, assuming they know what they are doing, maybe these Dems at the Fed have it all worked out. Keep the plates spinning for just a bit longer, then blame Trump in Q2.
So I think the T-bonds are going to rally from here until the Fed panics, cuts and restarts QE/ twist and then Bill Gross et al sell the bonds to the Fed.

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