Bonds!

[thowed]

It's up after hours, so possibly not.  But no idea how people will feel tomorrow. 

 

I think most people thought rates were going up, and it was contrarian to think he'd be dovish?  But maybe everybody was HOPING he'd be dovish, and so have been caught offside.

[TwoCitiesCapital]

On 4/28/2026 at 8:08 AM, TwoCitiesCapital said:

I think a 6+ month reversal in a multi year trend that was basically uninterrupted is more signal than noise

 

Let's add another two months to the trend. 

 

 

[rogermunibond]

What are people's expectations of the Warsh Fed?  If he wants Fed reserves to be at a much lower level, doesn't this naturally imply that he wants some form of interbank lending to take over the provision of liquidity?  And given the size of the liquidity need that's not even possible now.

[wabuffo]

I'll put a marker down and say he can't do it for reasons I've laid out before. 

 

But beyond on that, I'm not sure why this should even be an objective for the Fed.   

 

There's no upside and only downside since too many reserves isn't a problem, but even a tiny bit too few reserves and things immediately go haywire in the Fedwire payments system and the short-term interest rate the Fed is trying to control.

 

Meanwhile as the US (and global economy) grow(s),  the demand for central bank liabilities grows organically so the objective has an ever so slight headwind.  

 

Bill

Edited 47 minutes ago by wabuffo