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Michael Howell observes deliberate manipulation of bond market volatility, which he terms "yield volatility control." This policy uses short-term issuance and Treasury buybacks to suppress yields, potentially by 50 basis points on the 10-year note.
An AI system analysis by Michael Howell indicates that the two-year Treasury yield's signals for Fed policy are correct 85-90% of the time. The current spread suggests accelerating monetary tightening, tracking the 2021-2022 period.
Michael Howell explains that during the 2021-2022 monetary tightening, the S&P 500 fell 25% and crypto assets fell 75%. He suggests risk assets like stocks have yet to discount the current projected tightening.
Mallers expresses concern over the Fed's potential interest rate hike, which he believes would exacerbate the US government's financial woes due to over $8 trillion in short-duration debt maturing within one year. He highlights the Wall Street Journal's report on deficits threatening the bond market.
Peter St Onge highlights Fed Chair nominee Kevin Worsh's view that AI will cause "the most productivity-enhancing wave," leading to structural price declines that enable the Fed to slash rates without sparking inflation.
The Federal Reserve's balance sheet, which peaked near $9 trillion during the pandemic, has decreased to $6.74 trillion last week. Historically, gold comprised 86-87% of the Fed's balance sheet at the start of WWII.
The Federal Reserve's ownership of US federal debt reached 20% in 2021 and currently stands at 11.38% as of June 30th. This indicates capacity for further monetization, if needed.
The "Clarity Act" and "Genius Act" are legislative mechanisms designed to give legacy banks a head start in issuing stablecoins backed by Federal Reserve reserves and regulate crypto exchanges, enabling a covert CBDC system.