Macro Digest: Fed launches massive initiative to backstop the system
Chief Investment Officer
Summary: The Fed just made one of its most important moves in responding to the fallout from the Covid19 crisis by announcing what amounts to a backstop of the US financial system, with new purchases aimed at addressing the massive credit crunch in particular.
The US Federal Reserve just announced a massive new programme to backstop the US financial system, by far the most important move yet by the Fed to bring relief. The important thing here is that the Fed is ensuring that the marginal cost of capital is anchored after the recent explosion in credit spreads - hence the focus on credit-impacted instruments in its new menu of asset purchases.
This is the first step in controlling yields all along the US treasury yield curve - full yield-curve-control is likely forthcoming. US equity futures and long treasuries were heavily bid in immediate reaction to the initiative.
The new FOMC statement.
Details of the new plan, which includes unlimited QE, purchase of commercial MBS, corporate debt and more.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.