Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Fed Rules Out Yield Curve Control (for now)

Interest-Rates / Inverted Yield Curve Aug 26, 2020 - 03:54 PM GMT

By: Gary_Tanashian

Interest-Rates

That we are even having this conversation is proof that we are and have been in…Wonderland for years now.

Since at least 2001, actually. Back then Alan the Wizard Greenspan (mixing classic fairy stories, I know) began pulling levers that could never be un-pulled. There were no breadcrumbs with which to find our way back. Off the charts is off the charts. Exponential is exponential. And that’s when funny munny out of thin air entered the realm of normalcy; new normalcy where the financial system is concerned.

I assume that the ‘tool’ known as yield curve control (per this article) is part of MMT (Modern Monetary Theory) TMM (Total Market Manipulation) that the eggheads promote with not an ounce of historical monetary grounding, caution or even human-like soul. They are monetary Humanoids, AKA bureaucrats, AKA economic Ph.Ds with more statistical and theoretical knowledge than common sense. They released the FOMC minutes and policy micro-managers offer their interpretations.


“The lack of a more forward-leaning stance on the review conclusions —along with a sober view on the second half outlook and a firm rejection of yield curve control in current circumstances — is likely responsible for the immediate risk-off / financial conditions tighter response in financial markets,” said Krishna Guha, vice chairman of Evercore ISI. Guha said he was “relaxed and confident” the central bank will embrace a soft average inflation principle at its September meeting.

I know that they’ve employed all sorts of innovative tactics to manipulate the financial system to their will. But still, something about yield curve control is particularly onerous.

“There is nothing wrong with your television set [rational mind]. Do not attempt to adjust the picture [your point of view]. We are controlling transmission [the financial markets]. If we wish to make it louder [more expensive], we will bring up the [funny munny] volume. If we wish to make it softer [cheaper], we will tune it to a whisper [pretend to be hawkish]. We will control the horizontal [rates of interest]. We will control the vertical [price signals]. We can roll the image [roil the markets], make it flutter [you shudder]. We can change the focus to a soft blur [away from that man behind the curtain], or sharpen it to crystal clarity [command your rapt attention to our manipulative goals]. For the next hour [undetermined time period until the macro souffle wheezes, drops and flattens], sit quietly and we will control all that you see and hear. We repeat: There is nothing wrong with your television set [rational mind]. You are about to participate [have been participating] in a great adventure. You are about to experience [have been experiencing for nearly 2 decades now] the awe and mystery which reaches from the inner mind [dark corners of a long-since failed experiment that does not yet know it has failed] to… The Outer Limits.”

Here’s a chart I made months ago. I have not touched it today. It’s as it was marked up then, complete with the August 2019 projected flattening low. Since then… the steepening has been in play.

That goddamn Operation Twist – the ultimate macro manipulation* – was the crowning achievement of central bankers and their willful control of the financial markets. Again, I tell you that I am not a lunatic blogger with a financial market service that has a funny name (well, maybe); but instead I am someone who remembers clearly the Bernanke Fed’s stated objective with Op/Twist… to “SANITIZE” inflation. Their word, not mine.

That was a master stroke of yield curve control and the resulting – and cooked up – monetary policy instigated boom lasted 8 years. I am not sure what kind of control they’d cook up today. Would they want to keep it steepening in an inflationary signal (a steepening curve can signal either rising inflation or deflation) or tamp down the fledgling steepener?

I’d guess they are fine with steepening for now because in its early stages a steepener may not be lethal (and could be helpful to the Banks and Financial sector, among other reflation targets). People improperly get wigged out by inversion after all, and the tick to inversion was only a year ago. It is the steepener that will eventually become the problem through out of control inflation or destructive deflation. But for now they appear content (if it ain’t broke, don’t fix it).

Trump claims credit for his post-2016 portion of the economy but putting his massive and narcissistic ego aside for a moment, it was all Bernanke and it was created by the yield curve flattening. It is no coincidence whatsoever that the Trump economy has begun (actually had begun prior to COVID-19) to stall with the new steepener. The boom was created in large part by policy, irrespective of Obama this or Trump that.

* With respect to Operation Twist, the Fed stated that it would “sanitize” macro inflation signals by simply buying long-term Treasury bonds and selling short-term Treasury bonds, effectively forcing the yield curve into submission (flattening).

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas, all archived/posted at the site and delivered to your inbox.

You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Or follow via Twitter ;@BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.

By Gary Tanashian

http://biiwii.com

© 2020 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules