With the 7% inflation and full employment readings approaching, the New Year’s spark from the US Federal Reserve rose to four US interest rates this year.
But now is the time to put an end to some of the most volatile monetary inefficiencies in the financial system – a currency intended to keep the economy afloat during a pandemic.
To the surprise of many investors, negotiations to reduce the federation’s $ 8.7 trillion accounts began in December at a policy meeting and agreed to gradually suspend new bond purchases in the first quarter of 2022.
While the urgency to begin with the downturn seems to be unlikely to increase further until March, many federation officials have insisted that the process should begin soon this year. But when and how fast?
In an interview with Reuters this week, Atlanta federation chief Rafael Bosst was very clear.
Bostig considers the end result – which will initially allow federal bond holders to mature without re-investing – and should begin after the first interest rate hike in March.
However, he said the so-called ‘Quantitative tightening’ (QT) should be $ 100 billion a month, which is double the monthly rate of the last fiscal year 2017-2019, and $ 1.5 trillion ‘pure’ overflow ‘. It should be taken before evaluating the impact on that point.
It is unknown at this time what he will do after leaving the post.
On Wednesday, Cleveland Fed chief executive Loretta Master – a member of the federation’s open market committee voting this year – spoke with Bost and told the Wall Street Journal that the balance should be reduced as soon as possible without disrupting markets. However, she went on to say that the federation should not exclude the option of actively selling its assets.
Therefore, the federation is very concerned about this and suddenly the marketers are working part-time.
Excess and speed
JPMergan Flows and Fluid Expert Nicolas Panigitzzolow and his team conclude that what they see as a global ‘profit margin’ is far behind us and that large-scale proxies will be significantly reduced over the next two years.
The JPM team will see Fed QT in July after a second price hike and expect the market to borrow an additional $ 350 billion, assuming it reaches $ 100 billion in monthly earnings and agency bonds by the end of this year. Debt owed by government and agency borrowers in the second half of 2022 and $ 1 trillion by 2023.
Compared to the net demand on the global bond supply, that position is declining by $ 1.3 trillion this year by 2021. An additional 35 basic points.
Another direct impact on Fed QT fluctuations is the reduction of commercial banks’ federal reserves and, consequently, their lending capacity. Globally, this will be offset by the purchase of bonds by the European Central Bank and the Bank of Japan this year, but JPM estimates that by 2023 those central banks will be further weakened as new bond purchases close to zero.
Due to declining central bank bond purchases and declining global debt demand By 2023, it will grow by half to $ 3 trillion from $ 7.5 trillion and return to annual revenue. No growth rates have been seen since 2010.
Has this ‘burned too’ any idea? When we look at international proxies to measure global profit growth in terms of nominal GDP or family equity and bond holdings, JPM considers profits lost.
Are they all under control? Will this be enough to control inflation and flea markets?
Amundy’s chief investment officer, Pascal Blanke, believes we will be able to cope with a new inflationary regime like the 1970s because governments need easy monetary control and borrowing from their central banks – post-colonial reconstruction and climate change.
“As part of this new regime, free market forces, neutral central banks and regulatory policies will take over control of the country for many years, while maintaining broad and double-digit financial growth. A focused economy.
Blanque has not caused inflation over the past decade because of the so-called monetary pace – or the exchange rate of a dollar – in the real economy.
He writes that real and inflation combined, then speed can be as stable as financial concepts predict, and continuous exchange will eventually show inflation – incidentally for both consumer and asset prices, as it is now.