The price of Money is still tight even if central banks are making small incremental adjustments.
Yes, Jerome Powell has said the Fed will begin buying around $40 billion in short-dated Treasury bills. That’s about managing reserves and keeping the system running smooth, it’s not a full blown return to QE. At least not yet 🤣
Quantitative tightening is still in place and the Fed’s balance sheet remains well below its peak. Long term interest rates are still setting the tone.
If liquidity were truly easing, 10-year bond yields would be falling but they aren’t.The market is still demanding higher returns for lending long term. It reflects heavy government borrowing and elevated fiscal risk.
You have got to keep an eye on Japan too. Short-dated Japanese government yields, including the 2-year, have been moving ever higher. That matters because years of ultra-cheap yen funding have supported global carry trades. If those unwind, it can tighten global liquidity further and add even more pressure across bond and currency markets.
We are treading water at present.
I really don’t see many Australians putting global bond and liquidity signals together like this and sharing them publicly. I think people deserve to see how the system actually works. Education matters.