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Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
@perfiliev
Nov 8, 2021 β€’ 8 tweets β€’ 2 min read β€’ Read on X
Hello and welcome!

Every now and then, I write educational threads about trading, investing and other exciting topics within the financial markets πŸ“ˆπŸ“‰

Have a look at the most interesting and popular threads below πŸ§΅πŸ‘‡ Image
If you like them, you can also follow me (@perfiliev) to make sure you won't miss the next one πŸ˜‰
A moderately entertaining thread about bond yields, duration and interest rates πŸ‘

It's got memes, charts, and awkward jokes 😬

β€’ β€’ β€’

Missing some Tweet in this thread? You can try to force a refresh
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Keep Current with Sergei Perfiliev πŸ‡ΊπŸ‡¦

Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture

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More from @perfiliev

Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
Mar 12
1/ Let's take a break β˜•οΈ

In this thread, I'll help you understand fractional reserve banking.

You'll learn about:
β€’ The biggest money creators in the economy
β€’ How your bank balance is an illusion
β€’ What banks do with your money
β€’ Why we get liquidity and solvency crises Image
2/ We live in a debt-based economic system.

There is over $100 trillion of debt in the United States supported by just (!) $21 trillion of dollars.

There is not enough money to pay back all that debt!

If you're wondering how that is even possible - you are not alone.
3/ The entire system is based on a simple but important idea that has to do with how banks operate.

I’m sure you noticed that it doesn't cost anything to open a deposit or a checking account - it’s free!

Not only it’s free but banks even pay you interest on your funds!
Read 44 tweets
Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
Dec 20, 2023
A short preview for my upcoming course πŸ”₯

It's a self-paced online course that explores how financial markets work through stories, examples, charts and infographics, giving you enough context to make sure "it clicks."

Quick thread on what's inside each module πŸ§΅πŸ‘‡ Image
The Financial Industry

β€’ The difference between capital and financial markets.
β€’ What does it mean, when someone works in DCM?
β€’ Shareholders want to get diluted?
β€’ The eternal battle: buy side vs sell side.
β€’ You know what market makes do!
β€’ But wtf investment banks do?Image
Fixed Income Markets

β€’ Why nobody likes fixed income?
β€’ What's a trillion dollars between good mates, right?
β€’ The three sweetest words in financial markets.
β€’ The problem of storing a billion dollars.
β€’ Six mind-blowing facts about yields.
β€’ The secrets of the yield curveImage
Read 10 tweets
Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
Apr 5, 2023
Banking problem is not due to the spread between deposit accounts and money market funds, even though it's historically high.

Nor is it due to deposits running from banks into MMFs.

The issue is that funds leave the banking system because of what MMFs do with that capital.

1/ Image
WSJ reports that more than 40% of MMF assets are invested into Fed's reverse repo facility (RRP).

If capital ends with the Fed, it is dead - it has left the economy and the banking system.

Unlike a typical commercial bank, the Fed doesn't need to invest to offer a 4% return

2/
If RRP wasn't available, MMF wouldn't have a risk-free alternative to invest.

Withdrawn deposits would be invested in a range of money market products and T-Bills - in both cases eventually ending up as deposits at banks.

Instead the money is wired to Fed, where it stays.

3/
Read 4 tweets
Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
Mar 30, 2023
The world runs on dollars.

It's not going away anytime soon - it's too ingrained into the world economy.

9 quick reasons for why it's difficult to replace the dollar despite what the FinTwit is telling you

πŸ§΅πŸ‘‡
#1 - In dollar we trust:

In fiat currency system, it's all about trust.

Trust that your currency has value.

Trust that it will be widely accepted.

Trust that the government will do the right thing to prevent the loss of value.
It took time for the dollar to earn it.

And it will take time for any other currency that wants to replace dollar to earn it too.

US dollar is backed up by powerful institutions, like the Federal Reserve, which work to ensure that trust is not compromised.
Read 12 tweets
Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
Mar 25, 2023
Bank: Hey! Fed, help us!!!

Fed: Yo, what's up?

Bank: We need some cash, quick!

Fed: Hey, calm the fck down... What's the problem?
Bank: You told us in 2021 rates will be zero until like forever! So we loaded up on some crap mortgage bonds that pay peanuts.

Fed: Lol!

Bank: Don't fcking lol us! You hiked rates by 5% - all of our bond portfolio is deep underwater. Nobody wants that crap paying 1%!
Fed: So what?! Don't stress out! They'll payout... eventually. You even booked them as Held-To-Maturity bonds, just sit tight, you'll be fine...
Read 17 tweets
Sergei Perfiliev πŸ‡ΊπŸ‡¦ Profile picture
Mar 23, 2023
Right now, the spread between the Fed funds rate vs 2-year Treasury yield is the highest since 2008.

What does it mean?

Usually, when the 2-year rate falls below Fed funds, it's an indication that the Fed will cut rates soon.

To see why, think about this πŸ‘‡ Image
Say you want to invest over the next two years. What would you choose?

1. Invest in a 2-year bond and get paid 3.9% p.a.

2. Invest into a daily Fed funds rate (5% atm) and roll the investment every day at whatever the Fed funds rate is at the time.
If you thought the Fed will raise interest rates such that an average Fed funds rate over the next 2 years would be >3.9%, then it's more attractive to invest with the Fed.

As rates go up, you'll be able to reinvest daily at a higher rate.
Read 6 tweets

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