The correlation was weaker in the 1980s/1990s, but starting after 2000, gold has historically done quite well whenever the Fed pauses or cuts
Source: Lyn Alden
China Injects Most Short-Term Cash Into Banking System on Record - Bloomberg
China pumped the most liquidity into its financial system via short-term monetary tool on record, suggesting policymakers are keen to keep funding costs low to bolster the economy. The People’s Bank of China granted lenders a net 733 billion yuan ($100 billion) of cash with the so-called reverse repurchase contracts on Friday. That came after data released this week flashed signs of a pickup in the economy last month, when consumer spending and industrial production came in stronger-than-expected. Lenders keep one- and five-year loan prime rate unchanged. Source: Bloomberg
BREAKING >>> Powell says inflation is still too high and lower economic growth is likely needed to bring it down
US 10-year is just 3bp shy of 5%... Federal Reserve Chairman Jerome Powell acknowledged recent signs of cooling inflation, but said Thursday that the slowing in price increases was not enough yet to determine a trend and that the central bank would be “resolute” in its commitment to its 2% mandate. “Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in prepared remarks for his speech at the Economic Club of New York. “We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters.” Source: CNBC, Ole S.Hansen, Bloomberg, Saxo
Ahead of Powell speech tomorrow...
Confidence in the Chair of the Federal Reserve has reached its lowest point in 20 years... By Visual capitalist
Stunning to see that markets are beginning to price-in chances of rate HIKES all the way until December 2024
There's now a ~49% chance of a rate hike by January 2024. There is even an 11% chance of a rate hike in July 2024... Meanwhile, the 10-year note yield is nearing 4.90% right now. Will 8% mortgages soon going to look like a good deal? Source: The Kobeissi Letter
China | PBOC adds net 289 billion yuan via medium-term facility as Debt Sales Surge
The move adds to recent efforts to ensure hitting GDP target - Offers Most Cash Support Since 2020 - Bloomberg China’s central bank is making the biggest medium-term liquidity injection since 2020, stepping up efforts to support the nation’s economic recovery and debt sales. The People’s Bank of China added a net 289 billion yuan ($39.6 billion) into the financial system via a one-year policy loan on Monday, the most since Dec. 2020. At the same time, it drained a net 134 billion yuan of short-term liquidity through open-market operations.
The Fed's balance sheet hit its lowest level since June 2021 this week, down over $1 trillion from the peak in April 2022
Annual changes in the Fed's balance sheet since 2002... Source: Charlie Bilello
Heavy Supply remains a risk for US Treasuries
How long will the Fed be able to continue with QT? Source: Michel A.Arouet
