Lions... Fed Stealth QE Is Just Getting Started.

From Greg M

Lions…

In a previous newsletter today, I covered this. Over four days last week, the Federal Reserve purchased $43.6 billion in U.S. Treasuries. This includes $8.8 billion in 30-year bonds on May 8, and $34.8 billion in shorter-term Treasuries earlier in the week. These purchases were conducted quietly, without public announcements or press releases. CLICK. (In my earlier post I provided evidence with links you can click on).

These actions are stealth quantitative easing (QE). Injecting liquidity into the financial system without formally announcing a QE program.

Why This Matters. Liquidity Injection… By purchasing large amounts of Treasuries, the Fed is injecting liquidity into the financial system, which lowers interest rates, AND boosts the stock market- AT A COST.

FED “SECRET” QE.

Market Support: These actions can support financial markets by making it easier for the government to finance its debt. Think of the US Government as a Zombie Corporation.

Signal to Investors: Even without a formal announcement, these actions signal to investors that the Fed is willing to step in to support the market, which can boost confidence.

The Bigger Picture. The Fed's balance sheet stays inflated. This approach allows the Fed to rig interest rates and support the stock market without the political/public backlash that might come with a formal QE announcement.

Lions… This is a silent shift in monetary policy. The Fed is providing support to the financial markets through these large-scale purchases. Keeping the illusion alive.

Market Implications. Bond Market… These purchases lead to lower yields, making borrowing cheaper. Stock Market. Increased liquidity can boost stock prices as investors seek higher returns. Cryptocurrencies… Assets like Bitcoin may benefit from increased liquidity injections and concerns about traditional currency values- which will drop as a result.

What’s Next? THE COST…

The Fed will continue these stealth purchases, and with that, we may see continued support for financial markets. However, what they will NEVER tell you is this. The Fed in here buying debt IS INFLATIONARY! And in the end, we all pay for it.

GM