Cable Update (GBPUSD)

Quoting Bones

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you can't just say taper is less than a rate hike and leave it that what we gotta figure out is how much the 120 billion per month is holding rates down , So lets just go Lala land and say over the next 10Y fed will keep inflation at 2% or below and the real yield is currently negative -1 % no doubt if they stopped QE tomorrow the 10 year would jump to 2-3%(where it was before QE) then 120billion QE p/m is worth up to 4% on the 10year ,but other curves would be affected different , it's worse the lower timeframe you go because thats been the target...

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Quoting Bones

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{quote} why would it have an interest rate ?

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Quoting Nordling00

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{quote} They are not the same, i leave it at that because raising interest rates are directly affecting people while tapering is more indirect. When you raise rates, you make it harder for people to borrow money. Which is more direct and significantly felt. When you taper, you give less money to government, commercial banks, private sector etc. (Depends on the asset classes in the purchasing programme) so you contract the economy less directly and softer compared to hiking rates. That's why CB's prefer tapering first before hiking the rates.

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Quoting Bones

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{quote} no they are identical ,theres no point in doing QE and raising rates ,the whole point of QE is lower borrowing cost , the reason they have to stop QE then raise rates is because there identical forces You can divide 120 billion by where you think rates should be ,thats not a negative number for sure on that chart. which is why banks are struggling and going further out the risk curve.

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Quoting asalami23

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{quote} Would love to read small example.

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Quoting Bones

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nice and easy ,understand qe first https://www.bankofengland.co.uk/mone...itative-easing

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Quoting Nordling00

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{quote} Okay let me put it this way: Let's say i want to put my savings to an American bank with 0.25% interest rate. When FED tapers, i won't be getting more money even though USD's value increased. But when they hike rates and make it 1.00% i will be getting more money. So if i want to earn money from interest rates, tapering doesn't really affect me but instead of US banks i can prefer a New Zealand bank who recently hiked interest rates.

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Quoting Bones

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{quote} well thats saying the same wrong thing in another way ,

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Quoting Nordling00

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{quote} It says bond yields. I am not talking about the bonds i am talking about the direct interest rate on the money. So QE lowers the bond yields but rate hikes directly affect the interest on money. Which is why tapering is a softer solution than rate hikes.

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Quoting Bones

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{quote} bonds are lending money rates ,you seem to think there different somehow

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Quoting Bones

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ok tell me how your interest rate is calculated to the consumer

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Quoting Nordling00

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{quote} Because i am talking about the interest that i am getting when i put my money on the bank. But you are talking about the one that i am paying when i borrow money.

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Quoting Bones

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{quote} there completely related ,theres no difference bond and treasury are at the core of the calculation , look Bank of England ,thats what they influence the core cost of money with QE $40 billion =1% rise {image}

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Quoting Georginson

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{quote} What most traders don't know is that, indicators respond to prices, while prices don't respond to indicators. The day traders finally know what prices respond to, then they have 50% of the breakthrough, while the day they start applying modest risk/money management, then they will have 90% breakthrough, the remaining 10% breakthrough to complete 100% will be found when they can control their emotions.

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