On the morning of (an unusually pivotal) #FOMC meeting, the CME futures market is predicting a 65% chance of a 50 bps cut of the federal funds rate, and a 35% chance of a 25 bps rate cut.
MORE IMPORTANT TO ME as a fund manager is what the FOMC minutes and Jerome Powell have to say (definitively) about the Fed's balance sheet going forward.
Will #QE begin in earnest? Or will the Fed wait for turmoil in the bond markets before ending "not-QT"?
In other words, will a new wave of liquidity begin to flow from the US government into the private sector? If so, at what rate?
Because we have non-free, centrally-manipulated markets, I will be watching today's events with great interest.
🍿 #macro
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They will wait for turmoil in the bond markets. Not enough pain yet. IMHO.
Send it down to hell. Just for the lolz.
Jesus descended before he ascended. 🤔🧐🤔🍿
I think the recent letter from U.S. Senators asking the Fed for a 75bps rate cut was to provide top cover so when the Fed cuts 50bps, they can appear calm, controlled, and dovish by contrast.
Further, it’s difficult to imagine that the Fed *won’t* resume QE policy.
All roads lead to bitcoin.
Eagerly waiting doc for your thoughts on today's circus show
I'm sure I'll have some opinions after Powell's press conference this afternoon.
I’m anticipating your interpretation of today’s events with great interest.
Would they start QE this soon? Lyn seems to think increase in global liquidity comes mid 2025. Does US QE significantly influence global liquidity or nah?
They probably won't announce the start of QE (purchasing Treasuries and/or MBS) today. Instead, they are likely to focus on the federal funds rate and their future intentions (with the FFR).
US net liquidity is separate from global M2 monetary supply... but they generally ebb and flow in relation to each other.
Anything can happen today, but probably they will end doing what is worst for the economy and the middle class.
Time to keep stacking sats. 🫡
Thanks for the update and looking forward to your follow up post on the meeting. Thanks for the great and free content. Always appreciated!
Looking forward to your feedback on it Jeff.
BREAKING: 50 bps it is.
"In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent."
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Do you think they were going to 25 and then the letter from Warren and her ilk made them push it?
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