🚨 There is now a 99% chance of a 25 bps interest rate cut at next week's FOMC Meeting 🚨
Source: Barchart
Since The Fed cut rates, USA Sovereign risk has exploded higher...
Source: www.zerohedge.com, Bloomberg
Inflation surprises are picking up since Fed rate cut...
Source: www.zerohedge.com, Bloomberg
The BOJ kept interest rates steady on Thursday
The BOJ roughly maintained its forecast that inflation will hover near its 2% inflation target in coming years, signaling its readiness to continue rolling back its massive monetary stimulus. The Yen climbed as much as 0.9% on Ueda comments.
The Swiss National Bank made a solid nine-month profit on rising equities, bonds and gold prices, increasing the chances for a restart of profit distributions after a two-year break.
Switzerland’s central bank notched up a gain of 62.5 billion francs ($72 billion) for the first nine months of the year, it said on Thursday. Although the strong franc ate into the results, the SNB extended its profit during the July-September period. Source: Bloomberg
👉 A very important chart about global liquidity...
While the fed is still in qt mode (it has decreased the size of its balance sheet by $200B between May and September), the PBOC is in qe mode having increased its balance sheet by $560B between May and September... Ne-net liquidity is increasing. With global central banks cutting rates at the most aggressive pace since the pandemic and with the PBOC expanding the size of its balance sheet almost 3x more than the Fed is reducing it, it will be interesting to see the consequences on inflation + on gold, silver, etc. Source chart: Jeff Weniger
Mind the gap: Assets in US money market funds have hit a fresh ATH at $6.5tn, although the relevant Fed Funds Rates have fallen and are likely to fall further.
Note however that the "relative" figures (i.e money market funds AuMs as a % of total assets AuMs) currently stand at all-time low whereas equities weight is at all-time high... Source. Bloomberg, HolgerZ
Bond market volatility is spiking:
The ICE BofA MOVE Index hit 123.8 points last week, the highest level since January. The MOVE index, also called the “VIX of bonds” is a metric measuring yield volatility of 2-year, 5-year, 10-year, and 30-year Treasuries. The index has skyrocketed 38% in just 3 weeks as yields started rising following the Fed's decision to cut rates by 50 bps. Over this period, the 10-year Treasury yield jumped from 3.64% to 4.10%. At the same time, the popular bond-tracking ETF, $TLT, fell by 6.8%. What happened to the "Fed pivot?" Source: The Kobeissi Letter, The Daily Shot
