There is more than one option for the Fed.
Earlier this month, I wrote about what saved the stock market. It’s also what supports the real economy, and it’s what 99% of financial commentary is about, especially recently.
What worries me is the other thing: the call for the Fed or other central bankers to buy bonds when liquidity is gone. The most forgotten moment of the pandemic was when Treasury yields rose. higher As fears peaked in March 2020. This went against everything the fundamentals were suggesting (and it eventually did).
That episode was an indicator of the treasury market with road Lots of influence. It’s something. Zero Hedge writes about today.:Basic trading. As they highlight, there is now a $1.1 trillion notional short position in U.S. Treasury futures.
It’s a perpetual accident waiting to happen, and no one is in a position to do anything about it. We all assume that the Fed will be there to clean up the mess when it eases the crisis, as it did in part during the yen carry trade collapse.