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🚨The Fed's balance sheet has dropped to about $7.1 trillion. Is it really good for the market? Let me tell you what I think!
Today, mainstream media at home and abroad are hotly discussing the topic of the Fed's balance sheet falling to $7.1 trillion, and the cumulative debt reduction this year is $1.39 trillion. Undoubtedly, this news seems to be a positive market signal.
But don't forget, I have told you before that as of August this year, the US government debt has reached $35.3 trillion (refer to the data of Trading Economics in the figure below), and it will generate $1 trillion in interest every 3 months, which means that the entire investment market is still facing huge debt pressure!
However, in this environment, mainstream media at home and abroad have consistently hyped up and released seemingly positive market news. Analysts believe that...
🤔 There are two possible explanations:
1. Stabilizing the economy: The economy may really have encountered difficulties and needs to release some positive news to stabilize the FOMO sentiment in the investment market.
2. To sell: Some large institutions, venture capital or banks are preparing to sell. They need retail investors to feel that the market is still prosperous, so as to attract them to enter the market to take over.
💬What is your opinion? What do you think is the real reason for the Fed's balance sheet reduction? In the current economic environment, how do you see the future direction of the market?
Finally, do you agree with the above views? Or do you have anything else to add? Welcome to share your thoughts in the comment area, let us discuss the possible motivations behind the Fed's balance sheet reduction and the real situation of the market!
#美联储 #缩表 #市场动态 #美联储资产负债 #美国政府债务
Today, mainstream media at home and abroad are hotly discussing the topic of the Fed's balance sheet falling to $7.1 trillion, and the cumulative debt reduction this year is $1.39 trillion. Undoubtedly, this news seems to be a positive market signal.
But don't forget, I have told you before that as of August this year, the US government debt has reached $35.3 trillion (refer to the data of Trading Economics in the figure below), and it will generate $1 trillion in interest every 3 months, which means that the entire investment market is still facing huge debt pressure!
However, in this environment, mainstream media at home and abroad have consistently hyped up and released seemingly positive market news. Analysts believe that...
🤔 There are two possible explanations:
1. Stabilizing the economy: The economy may really have encountered difficulties and needs to release some positive news to stabilize the FOMO sentiment in the investment market.
2. To sell: Some large institutions, venture capital or banks are preparing to sell. They need retail investors to feel that the market is still prosperous, so as to attract them to enter the market to take over.
💬What is your opinion? What do you think is the real reason for the Fed's balance sheet reduction? In the current economic environment, how do you see the future direction of the market?
Finally, do you agree with the above views? Or do you have anything else to add? Welcome to share your thoughts in the comment area, let us discuss the possible motivations behind the Fed's balance sheet reduction and the real situation of the market!
#美联储 #缩表 #市场动态 #美联储资产负债 #美国政府债务
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When will the Fed stop shrinking its balance sheet? Will it expand its balance sheet after it stops shrinking?
The abnormal fluctuation of SOFR at the end of the quarter is regarded as an important signal of liquidity crisis at the end of the balance sheet reduction cycle. Similar fluctuations also occurred on the eve of the end of the balance sheet reduction in 2019. JPM CEO said that the issue of stopping the balance sheet reduction has been put on the agenda. Generally speaking, the Federal Reserve will consider stopping the balance sheet reduction when the following conditions are met: 1. The excess liquidity shown by the reverse repurchase tool (RRP) is close to zero. At present, the indicator has fluctuated around 300 billion for several months, and theoretically there is room for further decline; 2. The size of the Federal Reserve's balance sheet has reached the preset target of 6.5 trillion, and it is still around 7 trillion. 3. The amplified fluctuation of SOFR at the end of the quarter suggests tight liquidity. Although it is unlikely that the balance sheet reduction will be stopped at the FOMC meeting in November, there is still some hope in December. It is expected that this opportunity will come within one to two quarters. In the long run, the new market bottoming process will begin after the balance sheet reduction stops, and then you can consider the layout of spot opportunities on dips.
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On May 20, according to the Fed's official website, as of May 14, the Fed's balance sheet had dropped to around $7.3 trillion, now at $7.304 trillion. The cumulative reduction since May is about $58.2 billion
On May 20, according to the Fed's official website, as of May 14, the Fed's balance sheet had dropped to around $7.3 trillion, now at $7.304 trillion. The cumulative reduction since May is about $58.2 billion
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