Forward Guidance

How U.S. Treasury Is Fighting The Fed | Nouriel Roubini & Stephen Miran on Treasury’s $800 Billion of “Stealth QE” via “Activist Treasury Issuance” (ATI)

Jul 23, 2024

01:16:22

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Economist Nouriel Roubini & financial analyst Stephen Miran discuss 'Activist Treasury Issuance', its impact on asset values, avoiding a recession, and potential divergence from the Fed's policy. They delve into the history of Treasury's policies and the implications of unconventional fiscal policy.

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Quick takeaways

Activist Treasury Issuance (ATI) reshapes monetary policy dynamics by deviating from traditional issuance guidelines.

ATI functionally resembles quantitative easing (QE) in manipulating interest rate risk through altering Treasury issuance structure.

Combining monetary and fiscal policies via Activist Treasury Issuance risks independence of the Fed and long-term economic stability.

Deep dives

The Impact of Activist Treasury Issuance on Monetary Policy

Activist Treasury issuance, referred to as ATI, has been reshaping monetary policy dynamics in the US by altering the balance between short-term bills and longer-term debt issuance by the Treasury. By deviating from traditional guidelines of issuing bills, ATI resembles a backdoor form of quantitative easing, pushing long-term treasury prices higher and yields lower. The Treasury's unconventional fiscal intervention through ATI is estimated to be equivalent to a notable policy rate cut by the Federal Reserve, impacting economic growth, inflation rates, and financial conditions.

Comparing U.S. Treasury's Short-term Debt Issuance to Federal Reserve's Quantitative Easing

03:28

Intro

5min

Exploring the Impact of Activist Treasury Issuance on Monetary Policy

16min

Analyzing the Impact of Activist Treasury Issuance vs. Quantitative Easing on the US Economy

4min

The Impact of Activist Treasury Issuance on Financial Conditions

21min

Analysis of US Treasury's Bill Share Increase and Crowding Out Theory

5min

Risks of Increasing Deficits and Debt in the US

8min

Implications of Activist Treasury Issuance on Economic Policies

13min

Exploring the Emergence of Unconventional Fiscal Policy: ATI

4min

Forward Guidance is sponsored by VanEck. Learn more about the VanEck Morningstar Wide MOAT ETF (MOAT) at https://vaneck.com/MOATFG.

New paper published by Hudson Bay Capital, written by Nouriel Roubini & Stephen Miran, “ATI: Activist Treasury Issuance and the Tug-of-War Over Monetary Policy”:

https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/635102_Activist_Treasury_Issuance_-_Hudson_Bay_Capital_Research.pdf

Nouriel Roubini’s book discussed in the interview, “Political Cycles and the Macroeconomy”: https://www.amazon.com/Political-Cycles-Macroeconomy-Alberto-Alesina/dp/0262510944

Nouriel Roubini’s latest book, “Megathreats”: https://www.hachettebookgroup.com/titles/nouriel-roubini/megathreats/9780316284059/?lens=little-brown

Follow Nouriel Roubini on Twitter https://x.com/Nouriel

Follow Stephen Miran on Twitter https://x.com/SteveMiran

Follow VanEck on Twitter https://x.com/vaneck_us

Follow Jack Farley on Twitter https://twitter.com/JackFarley96

Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance

Follow Blockworks on Twitter https://twitter.com/Blockworks_

Timestamps:

(00:00) Introduction

(01:18) What Is "Activist Treasury Issuance" (ATI)?

(08:00) The Mechanics Of How The U.S. Treasury Has Altered Engaged In "Activist Treasury Issuance"

(20:52) VanEck Ad

(24:21) Activist Treasury Issuance Played A Role In Boosting Asset Values, And In Avoiding A Recession (And Might Have Caused A "No Landing" Instead of a "Soft Landing")

(29:53) History of Treasury's "Bill Share": GFC, Money Market Reform, March 2020 Panic

(33:44) How Much Does Current Treasury Issuance Differ From Historical Issuance Patterns?

(45:43) Permissionless Ad

(46:46) Does Government Borrowing "Crowd Out" Private Investment?

(59:09) Will ATI Continue In The Next Presidential Administration?

(01:07:20) Long-Term Interest Rates Could Rise and Force a "Meaningful Repricing of Risk Assets"

(01:10:49) It's Not Just The Fed - U.S. Treasury Has "Forward Guidance" Now Too

(01:13:02) Nouriel Roubini's Closing Thoughts

Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

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Forward Guidance

How U.S. Treasury Is Fighting The Fed | Nouriel Roubini & Stephen Miran on Treasury’s $800 Billion of “Stealth QE” via “Activist Treasury Issuance” (ATI)

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Impact of Activist Treasury Issuance on Monetary Policy

Comparing ATI and Quantitative Easing Effects

Challenges of Blurring Monetary and Fiscal Policies

US Treasury and Backdoor Monetary Policy Impact on Economy

Concerns of Activist Treasury Issuance and Economic Impact

Comparing U.S. Treasury's Short-term Debt Issuance to Federal Reserve's Quantitative Easing

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Forward Guidance

How U.S. Treasury Is Fighting The Fed | Nouriel Roubini & Stephen Miran on Treasury’s $800 Billion of “Stealth QE” via “Activist Treasury Issuance” (ATI)

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Impact of Activist Treasury Issuance on Monetary Policy

Comparing ATI and Quantitative Easing Effects

Challenges of Blurring Monetary and Fiscal Policies

US Treasury and Backdoor Monetary Policy Impact on Economy

Concerns of Activist Treasury Issuance and Economic Impact

Comparing U.S. Treasury's Short-term Debt Issuance to Federal Reserve's Quantitative Easing

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