tyb
FOMC Minutes Signal Bigger, Faster-Than-Expected QT, Multiple 50bps Hikes
Since March 16th's FOMC Statement, and The Fed's rate-hike, US equities have soared (giving some back in the last couple of days) and bonds have been battered…And thanks to the extreme level of hawkish jawboning, the market's expectations for rate-hikes in 2022 have soared from 6 more to 9 more (with 82% odds of a 50bps hike in May)… and at the same time, rate-cut expectations for 2023/24 have soared from just over 1 cut to more than 3…And the yield curve has collapsed (with 2s10s swinging into inversion and back out - the latter the real signal for an imminent recession)…The big thing everyone is watching for in today's Minutes is just how aggressive the balance-sheet reduction is going to be after Brainard's comments suggested far faster-and-furiouser a contraction than anyone hoped for (an active 'sell-down' vs passive 'run off') because Powell specifically said at his Q&A that he is "sure there'll be a more detailed discussion of our [B/S reduction] in the minutes."
The Minutes were more hawkish than expected ($60-90 billion per month expected):
*FOMC: $95 BLN/MONTH CAP FOR ASSET RUNOFF LIKELY APPROPRIATE
*FOMC SUPPORTS $35 BILLION A MONTH ROLLOFF CAP FOR MBS
*FOMC SUPPORTS $60 BILLION A MONTH ROLLOFF CAP FOR TREASURIES
*FOMC BACKS ROLLOFF-CAP PHASE-IN OF 3 MONTHS OR MODESTLY LONGER
*MANY FED OFFICIALS SAY 1 OR MORE 50-BPS HIKES MAY BE WARRANTED
https://www.zerohedge.com/markets/fomc-minutes-signal-bigger-faster-expected-qt-multiple-50bps-hikes
plus you had this Cap#2 an hour before on the NAS
PPT anyone?
Biltmore