The US is effectively running a war economy and the ultimate headache is typically not seen until the production pace is slowed. Meanwhile, Yellen allows for stealth QT in upcoming weeks and months.
Steno Signals #81 – Fed member promises that QT is effectively already over
The Fed has abandoned the strategy of bringing bank reserves (substantially) down, which effectively means that QT is over. This happens amidst rising freight rates. Rising liquidity and inflation?
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Something for your Espresso: Is something wrong with the oil?
Either oil rebounds here or else we probably have to accept that this is one of the steep declines in demand that we cannot explain in real time – also known as a recession. We are at a critical juncture and markets don’t care.
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ECB Watch: 6 charts on how EUR QT impacts markets
Ahead of the ECB decision, we release our chart book on the connection between EUR liquidity and moves in EUR markets. The ECB is likely to ramp up QT from July onwards and TLTRO repayments add to the liquidity malaise.
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Something for your Espresso: Will the Fed convince markets that this is not a pause?
The Fed is not on pause. That is at least the message they try to convey to markets, but data will decide, and we have no concrete guidance on the path ahead. A well-orchestrated pause has an embedded hiking bias.
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