Next Week 26 March Sunday 2023
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Fed Changes
Since last March, the Fed boss has been on a mission to smash inflation by jacking up interest rates. And to prove he means business he’s sent the Fed on the most aggressive rate hike cycle in history. This has paid off. The annual inflation rate is down from its June peak of 9.1% to 6% today. But it’s also come with some serious collateral damage… As we’ve seen over the past couple of weeks, it’s triggered a panic in the banking system. Higher rates have torpedoed the value of the long-term bonds banks have been holding to back deposits. This brought on the collapses of three U.S. banks. And regional bank shares are getting clobbered.
Gold as inflation hedge and retain monies
On April 1st, 2019 gold was reclassified as a Tier 1 asset after having been a Tier 3 asset under previous Basel Agreements. This means that it is recognized as a high-quality liquid asset (HQLA).⁴ This is why we believe commercial banks will move to holding more gold. Gold has several characteristics that could make it an attractive addition to a bank's balance sheet, particularly during inflationary or stagflationary times: Zero counterparty risk: Gold does not rely on the creditworthiness of any institution or government, which means there is no risk of default associated with it. This can be appealing to banks, especially during times of economic uncertainty or stress. Hedge against inflation: Gold has historically been seen as a hedge against inflation because its value tends to rise when the purchasing power of fiat currencies declines. In an inflationary environment, holding gold could help banks protect their balance sheets from the ...
Treasury Volatility
State of the Market - Weekly Report The main focus, the important stuff, delivered each Monday.
In short, Americans are out of cash.
Can you see what it means? In short, Americans are out of cash. Consumer debt is at an all-time high, and personal saving is lower than it’s ever been. According to the Wall Street Journal , even wealthy Americans could soon suffer “more than usual.” Over the course of my career, I’ve seen a lot of things — but I’ve never seen anything quite as alarming as this. What does it mean for the U.S. economy?