Fed’s shrinking of balance sheet via quantitative tightening is ‘a complete mistake,’ says Mizuho

Fed’s shrinking of balance sheet via quantitative tightening is ‘a complete mistake,’ says Mizuho

The Federal Reserve’s attempt at shrinking its balance sheet through so-called quantitative tightening, or QT,  is “a complete mistake,” according to Mizuho’s chief economist for the U.S. “There is a nontrivial probability that market liquidity will be adversely affected well before the targeted $2 trillion has been rolled off, preventing the Fed from accomplishing its … Read more

Central banks must buy bitcoin to hedge against sanctions: Harvard Ph.D. candidate

Central banks must buy bitcoin to hedge against sanctions: Harvard Ph.D. candidate

A research paper published at Harvard University is advocating that central banks should buy bitcoin BTCUSD, +2.56% as a hedge against sanctions by other countries. The paper, titled “Hedging Sanctions Risk: Cryptocurrency in Central Bank Reserves,” was authored by Ph.D. candidate Matthew Ferranti from Harvard’s economics department, and likens central banks’ gold reserves to potential … Read more

Fed warns of ‘low’ market liquidity in $24 trillion Treasury market, in latest financial stability report

Fed warns of ‘low’ market liquidity in $24 trillion Treasury market, in latest financial stability report

The Federal Reserve on Friday confirmed what many investors were saying for some time: the $24 trillion Treasury market has been experiencing low levels of market liquidity in recent months. The central bank has been rapidly increasing interest rates since March as part of a fight to bring inflation down from a 40-year high. The … Read more

Why stock-market investors fear ‘something else will break’ as Fed attacks inflation

Why stock-market investors fear ‘something else will break’ as Fed attacks inflation

Some investors are on edge that the Federal Reserve may be overtightening monetary policy in its bid to tame hot inflation, as markets look ahead to a reading this coming week from the Fed’s preferred gauge of the cost of living in the U.S.   “Fed officials have been scrambling to scare investors almost every … Read more

U.K. Prime Minister Defends Tax Cuts as Market Turmoil Continues

U.K. Prime Minister Defends Tax Cuts as Market Turmoil Continues

LONDON—Prime Minister Liz Truss looked to reassure the British public and rattled investors that her plan to cut taxes wouldn’t lead to prolonged financial instability, arguing in a series of interviews on Thursday that the country had been buffeted by global shocks rather than her government’s reforms and that her policies would result in faster … Read more

‘We are in deep trouble’: Billionaire investor Druckenmiller believes Fed’s monetary tightening will push the economy into recession in 2023

‘We are in deep trouble’: Billionaire investor Druckenmiller believes Fed’s monetary tightening will push the economy into recession in 2023

Billionaire investor Stanley Druckenmiller sees a “hard landing” for the U.S. economy by the end of 2023 as the Federal Reserve’s aggressive monetary tightening will result in a recession.  “I will be stunned if we don’t have a recession in ‘23. I don’t know the timing but certainly by the end of ‘23. I will … Read more

China’s Central Bank Moves Further to Bolster the Yuan

China’s Central Bank Moves Further to Bolster the Yuan

China’s central bank took another step to shore up the yuan, making it more expensive for traders and institutions to bet against the currency after it weakened rapidly against the dollar. The People’s Bank of China said on Monday that financial institutions selling foreign-exchange forward contracts will be subject to a 20% risk-reserve ratio, up … Read more

Yen rallies after Japan intervenes for first time in 24 years

Yen rallies after Japan intervenes for first time in 24 years

The dollar dropped sharply against the Japanese yen on Thursday, in the first intervention to support its currency since 1998, after the Bank of Japan bucked the trend of other central banks by not hiking interest rates. The dollar USDJPY, -0.86% dropped swiftly, trading at 142.20 yen from 144.08 yen on Wednesday, in action timed … Read more

Dollar’s Rise Spells Trouble for Global Economies

Dollar’s Rise Spells Trouble for Global Economies

The U.S. dollar is experiencing a once-in-a-generation rally, a surge that threatens to exacerbate a slowdown in growth and amplify inflation headaches for global central banks. The dollar’s role as the primary currency used in global trade and finance means its fluctuations have widespread impacts. The currency’s strength is being felt in the fuel and … Read more

Why ‘quantitative tightening’ is the wild card that could sink the stock market

Why ‘quantitative tightening’ is the wild card that could sink the stock market

Quantitative monetary easing is credited for juicing stock market returns and boosting other speculative asset values by flooding markets with liquidity as the Federal Reserve snapped up trillions of dollars in bonds during both the 2008 financial crisis and the 2020 coronavirus pandemic in particular. Investors and policy makers may be underestimating what happens as … Read more