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Strategies & Market Trends : US Inflation and What To Do About It
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To: ggersh who wrote (1171)10/8/2019 3:32:49 PM
From: RetiredNow  Read Replies (2) of 1504
 
here we go, ggersh! The Fed announced a resumption of QE, although they aren't calling it QE. Make no mistake, this is QE4. And guess where their focus is? Short dated treasuries and the repo market, just as I've been saying. So my bet on short dated/duration treasuries will continue to pay off, since the biggest whale of them all, the Fed, is going to prop up that market.

The thing we're likely to also now see as the Fed allows their balance sheet to grow organically (aka QE4), is that short dated treasury yields will come down, which should help to steepen the curve a bit and relieve some pressure on banks in the short term. Why would all of this be necessary if the economy was ok? The answer is that it would not be necessary if the economy was ok. The economy is not ok.

Also, one more thing. Trump is going to see this as a green light to go tougher on China. Don't look for a deal of any kind before his re-election. Even if Warren wins, she's not big fan of China's either. So China is staring at an anti-China Trump or an anti-China Warren. Which one will they go for? Doesn't really matter, because this trade war will be with us for the foreseeable future, which means stocks are not going to have a pleasant time of it.

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Fed to resume asset purchases to prevent a cash crunch
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