⭐️ Special post: What will happen under the surface of the 2024 market ‼️
☑️ Currently, US bonds held by the Fed, which amount to 95 billion dollars per month due to QT, have decreased, and the US government procures reimbursement funds by issuing US bonds, and since before, it was mainly using MMF funds managed in rerepositories to meet the supply needs of US bonds, but there is a risk that excessive supply will suddenly occur in the US bond market and upward pressure on interest rates will increase. Actually, this is the background behind recent stock prices, and in order for institutional investors such as banks, hedge funds, etc. that held MMF to hedge the risk of a sharp rise in interest rates due to concerns about the exhaustion of liberal repositories, Pow has received secret orders from the US government to increase cash on the market without relying on Fed mitigation and is accumulating profits by directing money into stocks now. As a result, the amount remaining in use of Liberapo has decreased, but MMF balances have increased to a record high of 6 trillion dollars or more since profits from stocks have been accumulated. This is a reserve for US bond purchase funds after the Liberal Repo is exhausted, and it offsets the pressure of rising interest rates. Next year, the Fed will continue QT, shrink its balance sheet, prepare for some kind of crash risk, and prepare the next excessive liquidity supply (QE). The US government is also expected to make financial contributions not only with redemption funds for US bonds already held by the Fed, but also with Ukraine support, election scattering funds, etc., and Pow will issue huge US bonds next year as well. If interest rates are cut, motivation to buy from foreign countries will decrease, so institutional investors in the US have no choice but to rely on MMF that has been accumulated now, and until this MMF decreases to about 3.5 trillion dollars, which is the pre-COVID-19 level, it will be applied from MMF. Naturally, MMF is also used by individual investors, so if interest rates are cut next year, MMF yields will drop, so it will be easier for funds to go to stocks, so that alone is a tailwind. On the other hand, it is also necessary to digest large amounts of US bonds in terms of policy. Since the Fed is still continuing QT and preparing for QE, the US government has adopted its own buyback policy, and the government buys loss-making US bonds at face value by regional banks, etc., to have spare capacity, and shift them to new US bonds with lower yields than now. It goes without saying that the United States is a high-leverage powerhouse that swells its own economy with bicycle operations and is complicit in other countries' wars in order to maintain a hegemonic country, and it goes without saying that it is essential for asset formation that we, as individual investors, continue to invest while this high-leverage power maintains its key currency. Also, there is no doubt that it is necessary to keep a close eye on this MMF balance since 2024 and beyond, as the decline will further strengthen the ceiling. Conversely, while this MMF is increasing, it is still a tailwind for the market, and if it starts to decline, it is counting down towards true liquidity depletion. However, the high-levers that anticipated that too are already under the surface of the Federal Reserve's permanent repo facility, commonly known as “SRF,” which can be said to be the next stealth QE, under the surface of the water, and it can gradually be seen in recent minutes. This SRF is 500 billion dollars a day, and Pow is considering that full-scale operation is probably around the 1st quarter when liberals are exhausted at the earliest, or around the 3rd quarter when external demand for US bonds due to interest rate cuts begins to decline, and the MMF begins to decline towards 3.5 trillion dollars. In other words, even if the liberal repo is exhausted, there is MMF, and even if MMF decreases, there is a huge safety net called SRF, so even if some kind of black swan occurs next year and an instantaneous crash occurs, it is a perfect place to buy, and it is clear that soon they will be supported by such safety net activation. Everyone can rest assured and continue to invest in US stocks in the future ‼️
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くじらくじら : Thanks for the info.
There's a lot of information.
yu-kee : Thank you for sharing the information on the riverpot.