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A quick take the Fed announcement tonight ...

federalreserve.gov/newsevents/pre…

Excerpt

The MMLF will assist money market funds in meeting demands for redemptions by households and other investors, enhancing overall market functioning and credit provision to the broader economy.

(1/5)
The Fed is anticipating the economy will slow down and many will stop getting a paycheck. or revenue for businesses. So they see huge outflows hitting money market funds soon (already?).

(2/5)
Mkts are already dysfunctional, especially ST paper like repo, CDs, and CP. The Fed does not want these money market funds forced to "dump" this paper to meet these outflows by selling them to dealers that already have a "full" balance sheet and cannot take on any more.

(3/5)
So they are providing this "facility" to money market funds so they can get a loan from the Fed to meet outflows.

These loans are secured by their existing securities in the fund as collateral. The term sheet in the link offers more detail.

(4/5)
The Fed needs to be the "lender of last resort."

This is what they are doing for squeezed money market funds expect huge outflows in a dysfunctional market.

Good move

(5/5)
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Jim Bianco
@biancoresearch
Initial claims out at 8:30AM ET Thursday. Expect a massive jump higher.

These are state-run programs. The Bureau of Labor Statistics merely aggregates the 50 state numbers, seasonally adjusts its, and publishes them.

States are free to report separately, and they do.

(1/5)
Connecticut has already said they jumped from 2,000 the week before to 25,000 this week.

(2/5)

ctmirror.org/2020/03/17/une…
Texas says they jumped from 4,500 to 16,000

(3/5)

houstonchronicle.com/business/artic…
Read 5 tweets
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Jim Bianco
@biancoresearch
I cannot emphasize enough how dysfunctional the bond market has become. It is at least as bad as 2008 and probably worse.

The dealers are barely making bids. This includes US Treasuries and European sovereign bond markets are collapsing … see next.

(1/4)
This chart is the Net Asset Value (NAV) of the Vanguard Total Bond Fund (BND). It is the difference between the price of the ETF and the value of the bonds it holds. The ETF is trading fully 6% below the value of the bonds!

(2/4)
This is no random ETF. BND has $50B in assets and is the largest bond ETF or near the top.

The NAV discount today is bigger than the worst day in 2008 (Oct 10). The bond market was so bad back then that TARP was announced the next day.

(3/4)
Read 4 tweets
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Jim Bianco
@biancoresearch
30-Year Treasuries are getting destroyed the last few hours.

EVERYTHING IS FOR SALE. Stocks, credit, gold, commodities, currencies and most sovereign bonds.

(1/3)
Treasuries have been "holding together" because the guy with a huge printing press, the Fed, has been buying. But even this has not been enough and the trap door opened this afternoon. Bond futures down more than 8 points.

(2/3)
The event of this generation is upon us and all markets are re-pricing for a slow growth, more inflation, and less risk taking. Not even the Fed can stop this.

Probably a new record for the worst total return day in history.

(3/3)
Read 3 tweets

Related threads

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Daniel McDowell
@daniel_mcdowell
Thread:

As of two hours ago, the Federal Reserve opened swap lines with 9 additional central banks. Coupled with the 5 standing lines, this brings the total # of liquidity arrangements to 14, as many as during the GFC. The same CBs are involved.

federalreserve.gov/newsevents/pre…

1/
Notably, however, the size of these swap lines is larger.

Lines for the Reserve Bank of Australia, the Banco Central do Brasil, the Bank of Korea, the Banco de Mexico, the Monetary Authority of Singapore, and the Sveriges Riksbank max at $60 bn.

They were $30 bn in 2008-10.
Lines for the Danmarks Nationalbank, the Norges Bank, and the Reserve Bank of New Zealand are now $30 billion.

They were $15 bn in 2008-10.

The five standing lines have no limit. In terms of potential int'l liquidity provision, the Fed's current actions have no precedent.

3/
Read 18 tweets
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Fernando Ulrich
@fernandoulrich
Fed está provendo liquidez de dólares para outros bancos centrais.

No padrão dólar, o Federal Reserve é efetivamente o banco central do planeta todo.

Quem não entende essa dinâmica fica perplexo porque o dólar sobe mesmo com crise aguda nos EUA. Thread 👇👇
Quando há demanda por liquidez em nível global, isso significa procura por dólares, dado que a maior parte das dívidas do mundo estão denominadas em USD.

Essa maior demanda por USD faz pressão no câmbio, o que torna todo o processo ainda mais doloroso aos
Que precisam de dólares, entrando num círculo vicioso que se retroalimenta causando a chamada “falta de dólares” (dollar shortage).

Como o USD é a moeda de reserva mundial e a unidade de conta do planeta, seu status e seu comportamento em crises difere da maioria das demais
Read 8 tweets
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moeti damane
@iamSANhedrin
Lets talk about the #FED's #Outlook on #US & #Global #Growth & where it sees #MonetaryPolicy #Regulation & #Supervision going given the #Zero / #EffectiveLowerBound...
Yesterday, 6th February 2020, the #FederalReserve (FED) Vice Chair for #Supervision addressed the #Money Marketeers of #NewYorkUniversity in #NewYork. His address, in the form of a speech, was coined "The #Economic Outlook, #MonetaryPolicy, and the Demand for #Reserves"...
Considering that the #FED is one of the most influential #CentralBanks in the world, it pays to get as much information from them as possible, especially when it comes to #monetarypolicy conduct and the #Global impacts thereof...
Read 11 tweets
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Sam Bell
@sam_a_bell
10 years ago -- November 3-4, 2009 FOMC meeting federalreserve.gov/monetarypolicy…
Read 21 tweets
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Expected Value Macro
@EVMacro
Has the #Fed fixed the problem?

No, #repo is still setting higher than Fed Effective
They have managed to bring repo back below their upper target range for EFFR, but so long as repo yields > EFFR, their is an incentive to switch
Will buying TBills fix the problem?

No. Banks are already flattish TBills so they are not adding to the float of collateral that is being financed in the Treasury Repo market.

Banks will simply gobble up all the supply at auctions and flip it to the Fed
Read 20 tweets
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Tom Paine
@TomPaine1737
A “brief” history of Deutsche Bank scandals, lawsuits & fines. This list is not comprehensive and is stacked with events from the past 20 years, yet it shows a deeply ingrained culture of generating profits with no regard for their customers or the integrity of the market.
1/70
After WW2, Allied authorities determined that Deutsche Bank had actively supported the Nazi regime and maintained close ties to officials like Himmler; and was also been involved in appropriating assets of financial institutions in countries occupied by the Nazis.
2/70
The Allied forces in occupied Germany divided the bank into 10 regional institutions, and then into 3. One each for the north, central, and southern regions of West Germany. The operations were reunited in 1957 and allowed to function under the Deutsche Bank name once again.
3/70
Read 70 tweets

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