BREAKING: Federal Reserve
The Fed said on Tuesday that it officially saw a net negative income of $114.3 billion in 2023, a record loss tied to expenses related to managing the U.S. central bank's short-term interest rate target. The loss last year follows $58.8 billion in net income in 2022, the Fed said. Source: Barchart
Gold's role as a neutral asset with millennia of history as money is experiencing a resurgence relative to US Treasuries for global central bank reserve accumulations.
Source: Tavi Costa, Bloomberg
Central banks cut rates at the fastest pace since heading into the pandemic.
Source: BofA, The Daily Shot
THE WEEK AHEAD... All eyes on inflation data + Powell speech on Friday
>>> In the US: 1. New Home Sales data - Monday 2. CB Consumer Confidence - Tuesday 3. US Q4 2023 GDP data - Thursday 4. February PCE Inflation data - Friday 5. hashtag#Fed Chair Powell Speaks - Friday 6. Total of 5 Fed Speaker Events >>> Inflation will also be the key theme in europe as flash CPI reports start to come in. >>> In Japan, the focus will be on the summary of opinions from this week's BoJ meeting as well as the Tokyo CPI, labour market data and industrial production. Picture via openart.ai/midjourney
Below central bank holdings of government bonds...
Greece was excluded from ECB QE under Draghi, but was included in COVID QE, giving it a big boost (pink). Greece then undermined the G7 cap on Russia at every turn, protecting its shipping oligarchs at the expense of the EU. If you can't behave properly, there should be no QE... Source; Robin Brooks
Don't be too excited about Fed rate cuts.
Examining Fed rate cycles since 1970s has revealed that investors have more to fear from 1st cut in a cycle than the pause. On average, sp500 is up +5% over 100 days between last Fed tightening and 1st cut. The trough in broader market is -23% over 200 days after 1st cut in a series, SRP has calculated. Source: HolgerZ
In case you missed it:
After bank of japan abolished negative interest rates this week for 1st time since 2016, the volume of bonds with negative interest rates has shrunk to $300mln. At its peak, there was a volume of $18tn worth of bonds with negative rates. But this weird experiment seems to be over – for now. Source: HolgerZ, Bloomberg
The Fed wants to loosen into what has already been the largest effective easing of financial conditions that we've seen from peak to trough...
equity markets, gold and digitalgold absolutely love it! Source: Markets & Mayhem
