DXY - Dollar Dollar on the Wall 🤑
-While everyone else expects Christmas gifts & Black Friday deals from this winter, investors expect the tapering.
-Why tapering, what's wrong with the current state of the economy?
Bond purchases have added more than $4 trillion to the Fed’s balance sheet, which now stands at $8.5 trillion. Yes, individuals like us got the benefits of the paychecks without having to really put too much effort into it, but guess who is giving more than it can? The answer is the good old Big brother Sam who had his debt ceiling recently pushed forward due to the fear that Sam will have to potentially default it.
-Central bank officials indicated Wednesday that they’re ready to begin “tapering” — the process of slowly pulling back the stimulus they’ve provided during the pandemic.
For most of the past year and a half, it has been buying at least $120 billion of bonds each month, providing unprecedented support to financial markets and the economy that it now will start to walk back.
Powell said the official tapering decision could happen at the November meeting, and the process would commence shortly thereafter. He added that he sees tapering being finished “sometime around the middle of next year.”
Jones said she would expect the Fed to cut Treasurys by $10 billion a month and mortgage-backed securities by $5 billion. There have been some calls from within the Fed to be more aggressive with mortgages considering the inflated state of housing prices, but that seems unlikely.
-Okay but what about the continuously growing and recovering companies?
Well, Wall St calls it "Pandemic Hangover: $11 Trillion in Corporate Debt".
Before the pandemic, U.S. companies were borrowing heavily at low-interest rates. When Covid-19 lockdowns triggered a recession, they didn’t pull back. They borrowed even more and soon paid even less.
The big picture is not as dramatic as it sounds though. Yes, things are a little messy with the high inflation, debt, and upcoming medicine to it, the tapering. However, the tapering was well communicated and some of its effects is already calculated in the current prices of the stocks. Does this mean that we won't have a drop after December? Of course No, but at least we know that the tapering is not shocking news for us - investors. Just take the steps accordingly and build your strategies around the facts. We highly recommend investing into DXY and BONDS.
Good Luck Everyone & Stay Safe!
-Why tapering, what's wrong with the current state of the economy?
Bond purchases have added more than $4 trillion to the Fed’s balance sheet, which now stands at $8.5 trillion. Yes, individuals like us got the benefits of the paychecks without having to really put too much effort into it, but guess who is giving more than it can? The answer is the good old Big brother Sam who had his debt ceiling recently pushed forward due to the fear that Sam will have to potentially default it.
-Central bank officials indicated Wednesday that they’re ready to begin “tapering” — the process of slowly pulling back the stimulus they’ve provided during the pandemic.
For most of the past year and a half, it has been buying at least $120 billion of bonds each month, providing unprecedented support to financial markets and the economy that it now will start to walk back.
Powell said the official tapering decision could happen at the November meeting, and the process would commence shortly thereafter. He added that he sees tapering being finished “sometime around the middle of next year.”
Jones said she would expect the Fed to cut Treasurys by $10 billion a month and mortgage-backed securities by $5 billion. There have been some calls from within the Fed to be more aggressive with mortgages considering the inflated state of housing prices, but that seems unlikely.
-Okay but what about the continuously growing and recovering companies?
Well, Wall St calls it "Pandemic Hangover: $11 Trillion in Corporate Debt".
Before the pandemic, U.S. companies were borrowing heavily at low-interest rates. When Covid-19 lockdowns triggered a recession, they didn’t pull back. They borrowed even more and soon paid even less.
The big picture is not as dramatic as it sounds though. Yes, things are a little messy with the high inflation, debt, and upcoming medicine to it, the tapering. However, the tapering was well communicated and some of its effects is already calculated in the current prices of the stocks. Does this mean that we won't have a drop after December? Of course No, but at least we know that the tapering is not shocking news for us - investors. Just take the steps accordingly and build your strategies around the facts. We highly recommend investing into DXY and BONDS.
Good Luck Everyone & Stay Safe!
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