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On The Margin
Michael Kao on November Fed Meeting, Treasury Refunding, & Bond Market Bear Steepening
Nov 1, 2023
Former hedge fund manager and private investor Michael Kao joins the show to discuss the U.S. Treasury refunding announcement and the Fed's FOMC meeting. They explore the dollar yen cross, the market's reaction to Powell's press conference, and the four horsemen of economic resilience. They also critique Jay Powell's approach, analyze interest rates and bear steepening in the bond market, and discuss the issuance of US Treasury debt. The speakers propose thinking outside the box to address the bear steepening in the bond market and highlight the criticism of Janet Yellen's actions.
01:09:14
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Quick takeaways
- The Fed's higher-for-longer policy may create challenges as the rest of the world adopts a more dovish approach, potentially driving the US dollar wrecking ball.
- The quarterly refunding announcement had a stimulative effect as short-dated bills are attractive to corporations and individuals seeking short-term cash flows, but macro forces driving the bond market may be more significant.
Deep dives
FOMC Meeting and Powell's Remarks
The podcast discusses the recent FOMC meeting where no additional rate hike was announced by Powell. The market reacted positively to the news, with stocks responding favorably. Powell reiterated that the Fed is not considering rate cuts at this time. The key takeaway is that the Fed's stance signals a higher-for-longer policy, which may create challenges as the rest of the world adopts a more dovish approach, potentially driving the US dollar wrecking ball.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode