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  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Let's wait and see. Treasuries price pulled back a bit today...
    Sep 20 12:57 AM | 1 Like Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Absolutely, Asby.

    It seems to me that the Fed's real goal is to pull down the long term yield, which is to manage the inflation expectation. But it appears they are not able to fully control the yield curve when China, Japan and all others trimming UST holdings. I'll watch long term yield closely in the following week. If today's spike couldn't last, the Fed is losing the battle to all the foreigners.

    And yes, maybe the Fed now changed its communication style. Previously they want to be transparent, so the Market will respond to whatever Ben says. That certifiably helps when the Fed needs the market to be on the same side to fight deflation. If from now on, the Fed don't need the market to be on the same side anymore (the market may front-run the Fed when the real tapering comes), the Fed may be as murky as Greenspan...
    Sep 18 11:37 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Sure. Asby. I'll keep this going on and on. LOL
    Sep 18 02:45 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    No tapering for now. It appears my data revealed the true purpose of the Fed. Cheers! :DD
    Sep 18 02:31 PM | Likes Like |Link to Comment
  • Hedged Convexity Capture Part III [View article]
    Harry,

    Thx a lot for the series. Although there is no history data for 3x for more than a couple of years, is there a way to simulate 3x performance based on their underlying, in this case, SPY and TLT? 20 years of data will be more convincing to me...
    Sep 10 01:30 PM | 1 Like Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    David,

    Thanks for your insight. I guess one difference between Japan and US is that Japan's debt are mostly owned domestically, while our debt are mostly owned by foreigners. This effectively linked US economy / finance to China's eco growth. Although US is driven my consumers and service sector, China is still a manufacturer and its high eco multipliers may spill over to US. Just some rough thoughts here...
    Sep 9 02:09 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Jaeger,

    Agree. Theoretically even if Fed starts tapering, it can still pull down long term yield buy lengthening duration.

    I think a more important question is whether the Fed still have full control of the yield curve. It appeared that the selling pressure generated by China and Japan is much heavier than the Fed can handle. But Treasury Dept. is reducing supply lately. So it's really hard to tell...
    Sep 9 02:00 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Thx again! I love to exchange ideas at SeekingAlpha.
    Sep 5 11:50 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    David,

    Thx for pointing that out.

    Regarding the strong demand for long term UST, what do you think on the near term direction of Treasury yield? Stay stable here? I think in long term it will steadily go up...
    Sep 5 11:49 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Jaeger,

    Thx a lot for the explanation. The Fed keeps inventing tools to manage the yield curve. Anyway, it appears the upward pressure on the long end of the yield curve is real and Fed is trying to stabilize it...
    Sep 5 11:46 PM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Asby,

    Yes. I made up the thesis first and then looked at the data. The data may or may not support the original thesis. But the more I looked at it, the more I found that the data itself is interesting...

    When we look at Treasury yield, 3 parties need to be considered. The Treasury Dept., the Fed, and the foreign governments, mainly China and Japan. Treasury Dept provide supply, the Fed and the foreigners provide demand. In the past couple of months, it appears that both China and Japan are trimming their Treasury holdings. That's the main reason the yield curve is steepening. I think you are right at this and the Fed reaches out to lengthening duration to stable the Treasury market (also look at Pampano's comment and my reply)...

    As for the new repo tool, I think it only affect the short end of the yield curve...
    Sep 5 12:36 AM | Likes Like |Link to Comment
  • Tapering? The Fed Is Doing Exactly The Opposite [View article]
    Pompano,

    Thanks a lot for your nice words. And I appreciate it that you linked my chart to the yield curve. This suggests that the Fed is actively managing the yield curve, instead of passively buying whatever available on the market (if so, the average duration will move in the opposite direction with the yield spread). Also it suggested that it's not likely, as claimed by a conspiracy theory, that the banks are dumping Treasuries they don't like onto Fed's balance sheet. So the jump of the average duration in Aug. reflected the Fed's purpose, that is to bring down / stabilize long term yield. This will be good for the stock market, and the bond market, as well.

    This is why I love to write for SeekingAlpha, always learn a lot from others. :)
    Sep 5 12:22 AM | Likes Like |Link to Comment
  • Leveraged ETFs For The Long Term: Rockets To The Poorhouse? [View article]
    Doug2,

    "There are other forms of leverage that rebalance much less frequently."

    Can you give some examples for this? Eager to know. Thanks.
    Sep 2 01:06 PM | Likes Like |Link to Comment
  • A Close Look At Fed's Balance Sheet Unveils A Cliff [View article]
    RS055,

    Thanks for the link. 6 year makes sense and matches with what I have on Chart 1.

    I parsed all Fed's POMO transactions ever since the beginning of QE1 to come up with my data. There is Permanent OMO (POMO) and regular OMO. I didn't count other OMO since I think they should be transitory (comparing to Permanent).
    Aug 14 11:43 AM | Likes Like |Link to Comment
  • A Close Look At Fed's Balance Sheet Unveils A Cliff [View article]
    Thanks Asby. I think there are two constraints: 1. credit worthiness, 2. money base. Currently it's credit worthiness because money base is inflated. But money base can be a problem in deflationary environment.

    Anyway I think my claim on circulating is not the right way to say it. Depending on the environment, $1 on Fed's balance sheet can be $0 or $n dollars in the financial system...
    Aug 14 11:40 AM | Likes Like |Link to Comment
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