"There is a major problem with using TIPS-implied inflation expectations as a report card for Fed policy and that is the fact that the Fed, after buying up more than a quarter of the total outstanding, is now the single most dominant force in the market for TIPS! To some degree then the Fed, in managing its TIPS portfolio via QE and QT, is able to write its own report card. And this at least creates the temptation to try to manage inflation more by controlling the narrative than by actually addressing it directly."
Why is the Fed still buying bonds?
And what would rates be under a free-market, without $8.5 trillion of Fed Fund coupons?
QT is a joke.
I mean, come on.
I know the 1-month Treasury yield is odd lately. We’ve had “debt ceiling” nonsense before, but this sort of inversion is wild:
Deutsche Bank pays up to $75mn to settle lawsuit from Jeffrey Epstein accusers
I’m reminded of a great line from William K. Black:
“The whole system weakens itself because it gets caught in this big lie that says we have to pretend that Deutsche Bank is a bank instead of a criminal enterprise.”
"Your problem is that you are trying to understand this as an economic story. Once you look at it as a crime story, you'll get it."
- Matt Taibbi describing the “GFC” to Joe Rogan, May 2018
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