The Federal Reserve’s balance sheet has recently grown by $94 billion in assets, which include collateralized securities and government bonds, in addition to the $297 billion increase that happened not long ago.
According to the Federal Reserve, this move was intended to address the liquidity issue experienced by commercial banks amid the recent financial crisis. However, it appears to be in contrast to the Fed’s tightening monetary policy.
This is a unique situation in the history of the Fed, as they find themselves between a rock and a hard place: QT (Quantitative Tightening) and QE (Quantitative Easing). Quantitative tightening involves decreasing the size of the balance sheet, while quantitative easing involves increasing the size of the balance sheet.
The decision to increase the balance sheet was a response to the liquidity crisis that commercial banks were experiencing, and the Fed’s move was intended to address this issue. However, this move seems to be in contrast to the Fed’s current monetary policy of tightening, which involves increasing interest rates and reducing the size of the balance sheet.
As a result, there may be more macroeconomic fluctuations in the future that are difficult to predict. This is a critical time for the financial markets, and investors must keep an eye on any changes that may occur.
Looking ahead, the question on many investors’ minds is whether the market will experience a “Sell in May and Go Away” scenario. This phenomenon refers to the historical trend of stocks performing poorly between May and October. With no FOMC meetings scheduled for April, this could be an opportunity for the crypto market, specifically Altcoins, to recover before moving into May.
Billionaire Jeffrey Gundlach Predicts Significant Rate Cut by Federal Reserve
The “Bond King” billionaire Jeffrey Gundlach has predicted that the Federal Reserve will soon make significant interest rate cuts. He said, “red warning signals for a recession,” as all yields on US Treasury bonds from the past two years “are much lower than the Fed’s fund rate.”
The CEO of Doubleline emphasized, “All USD yields from two years onwards are much lower than the fund’s lending rate.” The yield curve inversion occurs when short-term Treasury bond yields are higher than long-term bond yields.
Gundlach said the latest interest rate hike would be the Federal Reserve’s last. In February, the billionaire warned of the painful consequences of the next recession.
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This article was republished from azcoinnews.com