re: Discussion of Fed Liquidity’s Impact on Equity Markets

quote:

---

The 10-year bottomed at 0.569% on March 9 before recovering above 1% later that month. By April 1, it was close to testing that level again (0.582%) before a minor recovery and eventual drop to 0.570% mid-late April. Today marks the third lowest print on record, as the 10-year is currently trading a

---

10-year now at 0.536%

Wow - this is where I parked my car. Haven't seen one of these conversations in a while but there's been a lot of good ground covered.

This is just a quick comment, I'll follow up up with a more detailed response later.

I do think two important aspect that haven't been covered is the background history on the Fed's rules that (annoyingly) still date back to the post Depression acts. This basically dictates how they conduct most of their liquidity programs.

Also the other important aspect is the laundry list of capital rules (CCAR, DFAST, GSIB scores, BASEL, SLR, and LCR) that have created a Rube Goldberg cartoon of bank capital constrains. The Fed has been effectively trying to move balance sheet constraints from dealers to them where possible.

Where it shows up - FRA-OIS, EUR and JPY cross-currency basis (there is a LIBOR basis and OIS basis), and CP market clearing at first. This was critical area 1 that was fixed in late Mar early Apr, the rest gets murkier but can comment later.

Nice job all

The game has changed. The Fed is now under the umbrella of the Treasury. Enron style, off balance sheet accounting gimmicks so that they can literally do anything.

Holy water, try a sip

No matter the topic nor the OP, 90% of your posts are negative

The mouth speaks from the heart

Get your heart right so that you may be ready for the Grand Finale when it comes

Peace and love to you and yours

quote:

---

90% of your posts are negative

---

Says the guy who constantly posts about the coming of fire in the sky and the end of the world...

quote:

---

The game has changed. The Fed is now under the umbrella of the Treasury. Enron style, off balance sheet accounting gimmicks so that they can literally do anything.

---

Only 13(3) facilities are under the purview of the Treasury, and that's just for oversight rather than operation and execution. The street handles the 13(3) facilities execution. Blackrock for the SMCCF, PIMCO for the CPFF, etc.. The original liquidity programs via Tsy and MBS purchases are entirely on the Fed's purview. Operations dictated by the Fed. The Tsy does basically nothing with these except sending the check to the ESF for the Fed to use.

Accounting tricks don't matter and they've existed since the creation of the original god awful 12 regional Fed system in 1913. The numbers will always show up, you just have to look where to find it.

The Fed has no leverage constraints other than the ones they make up, e.g. the "10x" figure they've noted for these facilities, which is kind of worthless because they won't even get the total capital entrusted by the Treasury. The PMCCF and MLSF are designed so poorly that nobody uses them.

quote:

---

not fooling anyone with your alters @lsurussian

---

You got me!! I can't get anything past you!

Over the past 3-4 years, too many places to count, honestly. But now WFH is making me lose it.

I can't beleive how much I miss flying for 24 hours to somewhere I can't speak the language just so I can sit in a hotel room for a week listening to 50 management teams, central bankers, and politicians lie to me.

It's just not the same being lied to on Zoom. :(

ETA: I've even posted on the Poli board a couple times recently. That's where I am now, mentally.

Last time I ventured these boards I was on the trade floor for a very large bond shop, now I’m at a global macro HF.