For years since 2008, where the #federalreserve first implemented its #qeprogram, combined with lower interest rates, its balance sheet was producing income though coupons, prepayments and other items. Since the fed cannot make money on those programs, all the gains were sent to the US treasury on an annual basis. With the start of monetary tightening, #qt and interest rates hikes, the duration risk of the fed’s balance sheet portfolio has produced substantial losses, and all those remittances that for 14 years went to the US treasury to increase the US cash account, have gone from $4Bn/year to -$12Bn for 2022. That is a $16Bn hole the treasury will have to find, and finance, somewhere else.
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