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Fed Watch: Forecasting balance sheet bananas and yield curve control
The Fed’s corona crisis responses have been subject to some hefty discussions among market participants. Although the Fed has not officially crossed the direct debt monetization Rubicon like, for instance, Bank of England, this is a close at it gets (who called for MMT?). Moreover, the most recent credit bazooka with purchases of recently downgraded high-yield bonds (aka. Fallen Angles) have added to the narrative of the Fed’s role now having shifted from lender of last resort for banks to a commercial banker of last resort for the broader economy. This kind of “Helicopter Credit” clearly creates some ... (full story)