Feb. 7 at 3:25 AM
$TLT $DLY $JPM $BAC
I know the FED wants those MBS’s off their balance sheet, but mortgage rates must continue falling in order for them to off load them without taking a huge loss.
$2.23 trillion in MBS will take years to offload with higher rates. They will simply have to allow them to be paid down and eventually roll off.
Current balance sheet of
$6.81 trillion.
They would love to get
$2.23 T eliminated.
QT is still happening.
We will need cash from the sidelines to inflow in order to get enough liquidity to drive the market higher.
For now, people are getting paid too much to jump in the game.
They will keep that
$7 trillion parked if they continue getting paid 4:5-5%
We’ve also seen corporate bonds funds price appreciation for 12+ months. Those are still paying 6-10%
Rates have to fall for my predictions to work.
https://wolfstreet.com/2025/02/06/fed-balance-sheet-qt-42-billion-in-january-2-15-trillion-from-peak-to-6-81-trillion-lowest-since-may-2020-bye-bye-btfp/
