Thank you for the very clear write-up; I'm somewhat new to markets and your article helped me connect quite a few mental dots.
In an earlier related tweet, you said that you thought the Russell 2000 was the "the fastest horse". Is that because small caps are likely to be greater beneficiaries of loosened financial conditions than large caps?
Also are these 1Q bills likely to attract the same sets of buyers as bonds? In other words, by increasing the percentage of bills, is the Treasury trying to entice the same "customers" to buy a different "product" or reaching out to tap new customers?
Nice article, but I have to wonder if this shift to bills is really stimulative enough to outweigh all the other headwinds. There's a lot of HY debt that needs rolled, a brief respite in yields may spur the demand that's been absent in that area. Credit spreads are going to be key, and the economy is slowing.
I am new to your substack and it has been incredible to go through all your old writings.
That said, would you know where the $396-$460bn initial guidance for coupons is located in hard print? I am not doubting you as I recall seeing similar numbers somewhere, but just wondering where I could go about getting hard evidence of it for some of my personal research.
love your insights here! aside from a quick trade ideas this all seems to point to TIPS, but i fear the longer end becoming unmoored so feel we need the short nominal bonds piece too
very interesting as usual,
if I I undestood correctly this "implicit easing" is also potentially bullish for gold as
1) bearish for usd
2) real rates (= nominal - inflation) could be unchanged or lower
Yes agree, should be
This appears to have aged well - excellent post.
Thank you very much :)
Thank you for the very clear write-up; I'm somewhat new to markets and your article helped me connect quite a few mental dots.
In an earlier related tweet, you said that you thought the Russell 2000 was the "the fastest horse". Is that because small caps are likely to be greater beneficiaries of loosened financial conditions than large caps?
Also are these 1Q bills likely to attract the same sets of buyers as bonds? In other words, by increasing the percentage of bills, is the Treasury trying to entice the same "customers" to buy a different "product" or reaching out to tap new customers?
Thanks in Advance for your response.
Small caps were just done the most, most oversold
Thanks for the note. Your agility and clear reasoning are remarkable!
Thank you!
Nice article, but I have to wonder if this shift to bills is really stimulative enough to outweigh all the other headwinds. There's a lot of HY debt that needs rolled, a brief respite in yields may spur the demand that's been absent in that area. Credit spreads are going to be key, and the economy is slowing.
agree- hence see it as temporary reprieve
Amazing write up . 🙏 Vijay
Thank you :)
Thank you Florian, great coverage as always, appreciate it! Have a good day!
My pleasure :)
I am new to your substack and it has been incredible to go through all your old writings.
That said, would you know where the $396-$460bn initial guidance for coupons is located in hard print? I am not doubting you as I recall seeing similar numbers somewhere, but just wondering where I could go about getting hard evidence of it for some of my personal research.
Thank you. Love reading your work. Always insightful.
After a he NFP today, I think the panic may have less to do with poor auctions and more to do with getting blamed for a hard landing.
Your analysis is still spot on. IMO, the Biden admin is determined to make it to the election without a recession. The risk is resurgent inflation.
I think what I always think after reading your pieces: "He let's me read this for free and then thanks ME?"
Do you expect this will re-steepen the yield curve? If yes, will that have consequences?
If you're right, this likely leads to higher Fed rates. Is that USD bullish? Is that really bad for ROW?
love your insights here! aside from a quick trade ideas this all seems to point to TIPS, but i fear the longer end becoming unmoored so feel we need the short nominal bonds piece too