TS UMLAUFT

Fundamental, quantitative, research-driven investor | credit-focussed global unconstrained fixed income PM | tweeting on quant. investing and econ. history

[TS UMLAUFT @ts_umlauft]

Noteable changes in FOMC policy statement: "some additional policy firming" instead of "ongoing increases"; "[j]ob gains have picked up [...] and are running at a robust pace" instead of "[j]ob gains have been robust". The former change more dovish, the latter more hawkish. #FOMC

[TS UMLAUFT @ts_umlauft]

Surprisingly, recent turmoil in the US regional banking sector does not appear to have changed much in terms of Fed economic projections. #FOMC #FED #BankingCrisis

[TS UMLAUFT @ts_umlauft]

The long and variable lags of monetary policy...

[TS UMLAUFT @ts_umlauft]

(1) ECB ready to adjust policy in response to market conditions; (2) statement now stressing flexibility with regard to all instruments; (3) readiness to provide liquidity if necessary and willingness to reconsider TLTROs.

3/3

[TS UMLAUFT @ts_umlauft]

ECB: Although the terminal rate had been priced down by approx. 100bps over the past two weeks, there still were 1.5x rate hikes in the curve for the March meeting just prior to the meeting. The 50bps increase was not too much of a surprise, therefore.

1/3

[TS UMLAUFT @ts_umlauft]

At the same time, Lagarde stressed the data-dependent nature of future policy rate decisions. Statement reads dovish, overall:

2/3

[TS UMLAUFT @ts_umlauft]

#svb #SiliconValleyBank #bankrun #FDIC

[TS UMLAUFT @ts_umlauft]

The weekend is over and it seems that the US government has indeed precluded rescuing Silicon Valley Bank (SVB). We may, however, expect the FDIC to cover all deposits – insured as well as uninsured.

[TS UMLAUFT @ts_umlauft]

At the same time, the flight to safety will lead to (iii) price appreciation of government bills and bonds, and hence lower yields, as well as (iv) flight into the (perceived) safety of the largest banks which are and, by virtue of regulation, can be viewed as too-big-to-fail.