Trick Question: How Much QE Will Move the Bond Market [Ep. 175c, Eurodollar University]

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3 years ago

-----EP. 175c SUMMARY-----
Since 2008 the pace of purchases, sales - and everything in between - has not affected the price of bond yields. Indeed, bond yields seem to go the opposite way of they're 'supposed' to act. But what about the stock of purchases? Is there a total, that once reached, becomes critical?

-----EP. 175c TOPICS------
00:00 INTRO: Does either the flow or stock of quantitative easing impact bond yields?
00:44 Central banks have bought a lot of bonds, therefore the bond market is rigged.
01:51 From 2008-11 the Fed's purchases (flow) of UST were 'contradicted' by the bond market.
05:24 Central bank balance sheet expansion correlates well (enough) with capital market values.
08:41 Central banks were buying assets that the private market was ALREADY buying.
12:40 Central bank increases in system bank reserves is a deflationary warning.
14:34 The central banks buy sovereign bonds but other markets signal "warning, low growth" too.

----EP. 175c REFERENCES---
If Not ‘Flow’, Then Has ‘Stock’ ‘Rigged’ The Flattening Curve In QE’s Favor?: https://bit.ly/32Ijkf9
Alhambra Investments Blog: https://bit.ly/2VIC2wWlin
RealClear Markets Essays: https://bit.ly/38tL5a7

-------SHOW SPONSOR-------
Macropiece Theater with Emil Kalinowski (a/k/a Alistair Cooke, a/k/a Alistair Cookie) reading the latest essays, blog posts, speeches and excerpts from economics, geopolitics and more. Interesting people write interesting things, why not listen and hear what they have to say? You could do worse things with your time (i.e. Bloomberg, CNBC, et cetera). Recent readings include thoughts from: Adam Smith, Arthur Schopenhauer, Bank for International Settlements, George Friedman, J.P. Koning, Jean-Paul Sartre, Karl Marx, Liberty Street Economics, Lyn Alden, Maroon Macro, Matt Stoeller, Michael Pettis, Myrmikan, Perry Mehrling, Robert Breedlove, Rohan Grey, Velina Tchakarova and yes, even Jeff Snider.

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---------THE TEAM---------
Jeff Snider, Head of Global Investment Research for Alhambra Investments. Illustrations by David Parkins, myth maker. Audio and video editor, The Terence. Logo design by pixelist Lisa Jiang. Master of ceremonies, Emil Kalinowski. Musical outro is "Saint Nick" by Nbhd Nick, found at Epidemic Sound.

------FIND THE TEAM-------
Jeff: https://twitter.com/JeffSnider_AIP
Jeff: https://alhambrapartners.com/author/jsnider/

Emil: https://twitter.com/EmilKalinowski
Emil: https://www.EuroDollarEnterprises.com

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Terence: https://www.VisualFocusMedia.com

Lisa: http://Lisa-Jiang.com/
Lisa: https://twitter.com/@Nylonnerves

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