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Central banks are busy

Central Banks are in the news, and that’s typically not good. The FOMC meeting was uneventful from the rates stand point, despite Powell’s efforts to massage the audience towards a dovish view. The major piece of information was that QT will be tapered (read statement below) from $60Bn/month to $25Bn/month, in a wink to Janet Yellen that will see her financing needs reduced by $105Bn only in Q3. Coincidently, the U.S. Treasury announced its buyback plan: $2bn/week of coupon Treasury bonds and $500M/week of TIPS, which doesn’t make much sense considering we have a huge budget deficit. Following that, the Treasury will issue new debt to replace and refund existing one for $125Bn (thank you Jay!). Both the Fed and the Treasury justified their actions with their intention to support liquidity in the Treasury market (keep that in mind). On an other note, the BoJ intervened again to defend the Yen, but short sellers are defending the line at 155 vs USD.

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