FICC Focus Andy Constan on Fed Policy and Bond Market Myths: Macro Matters
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May 9, 2025 
In this engaging discussion, Andy Constan, chief investment officer of Damped Spring Advisors with nearly four decades of financial experience, shares insights on fiscal tightening, estimating cuts around $300 billion annually. He debunks common bond market myths and delves into the Fed’s balance sheet dynamics amid quantitative tightening. The conversation also highlights potential shifts in Treasury issuance and how monetary policy may affect bond yields, providing a thought-provoking analysis for those interested in macroeconomic trends.
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Damped Spring Firm Origin
- Andy Constan named his firm "Damped Spring" after the physical mechanism describing market behavior.
- He likens market participants to a spring and policymakers to dampers that smooth out market shocks.
Misconceptions About Net Liquidity
- The concept of net liquidity as a driver of asset prices is often oversimplified and lacks clear causality.
- Markets are complex systems influenced by multiple factors beyond simple liquidity metrics like bank reserves.
Understanding Treasury Market Liquidity
- Treasury market liquidity varies between retail-sized transactions and large institutional trades.
- True liquidity for large investors means moving sizable positions with minimal market impact and reasonable transaction costs.