Here are the 7 most important charts in global macro right now.
Together, they hint at what's next for the banking crisis.
#1 - Fed rate hikes expected to stop. Appears likely that now (5%) is the peak for Fed interest rates.
Together, they hint at what's next for the banking crisis.
#1 - Fed rate hikes expected to stop. Appears likely that now (5%) is the peak for Fed interest rates.
#2 - the Fed added ~$100B to its balance sheet last week, adding to the ~$300B in money printing the week before.
The Fed has now offset 2/3 of the last 15 months of balance sheet reductions in just 2 weeks.
The Fed has now offset 2/3 of the last 15 months of balance sheet reductions in just 2 weeks.
#3 - Despite the Fed balance sheet growing by a smaller amount last week, the Fed's total support to the global banking system INCREASED.
They just provided it via loans (liquidity) rather than outright asset purchases.
The banking system is still in trouble. But why?
They just provided it via loans (liquidity) rather than outright asset purchases.
The banking system is still in trouble. But why?
#4 - There's an ongoing exodus of bank deposits to money market funds.
Banks aren't earning much on their bond portfolios (SVB was earning 1.56% on $80B). As such, they can't offer ~5% interest to depositors.
Money Market Funds now offer ~5% returns: sfgate.com
Banks aren't earning much on their bond portfolios (SVB was earning 1.56% on $80B). As such, they can't offer ~5% interest to depositors.
Money Market Funds now offer ~5% returns: sfgate.com
#5 - With the Fed's BTFP program backstopping banks' underwater bond portfolios domestically, the banking crisis has shifted overseas.
Some non-G7 bank just borrowed the maximum ($60B) from the Fed.
Some non-G7 bank just borrowed the maximum ($60B) from the Fed.
#6 - Credit Default Swap prices for German banking giant Deutsche Bank have jumped.
These only pay off if the bank fails - investors see that as increasingly likely in the next year.
These only pay off if the bank fails - investors see that as increasingly likely in the next year.
#7 - The exodus of deposits to higher-yielding Money Market Funds is also impacting American financial giant Charles Schwab.
Credit Default Swap prices have suddenly jumped for the stalwart investment institution.
Credit Default Swap prices have suddenly jumped for the stalwart investment institution.
To better understand how these charts all fit together, check out my latest Weekly Macro & #Bitcoin Update.
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jessemyers.substack.com
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