FED: Warsh - Smaller Fed Balance Sheet Would Help Economy
A smaller Federal Reserve balance sheet would benefit the economy by creating greater clarity about the central bank's main policy instrument and allowing officials to heed closer to traditional policy rules, former Fed Governor Kevin Warsh, a leading candidate to replace Fed Chair Powell at the central bank's helm, said Friday.
- "There are many benefits of a smaller balance sheet," Warsh said, including "better economic outcomes."
- "We have two policy instruments, imperfect substitutes for each other, working sometimes at cross purposes, sometimes working together. But if the printing press could be quiet, you can have low policy rates," he told a Hoover Institution conference. (See MNI POLICY: Warsh Could Reshape Fed On Rates, Communications)
- He added that the Fed could eventually go back to a scare reserves regime and banks would adapt to the change over time.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
EURUSD TECHS: Trend Needle Points North
- RES 4: 1.1276 High Jul 18 ‘23
- RES 3: 1.1214 High Sep 25 2024 and a key resistance
- RES 2: 1.1188 0.764 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 1: 1.1144 High Oct 1 2024 / High Apr 3 and the bull trigger
- PRICE: 1.1048 @ 15:35 BST Apr 9
- SUP 1: 1.0882 Low Apr 7
- SUP 2: 1.0844 20-day EMA
- SUP 3: 1.0733 Low Mar 27 and a key short-term support
- SUP 4: 1.0713 50-day EMA and a short-term pivot level
The trend condition in EURUSD is bullish and the latest pullback is considered corrective. Key resistance at 1.0955, Mar 18 high, was breached last week, confirming a resumption of the uptrend and this maintains the price sequence of higher highs and higher lows. Sights are on 1.1188 next, a Fibonacci projection. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support lies at 1.0844, the 20-day EMA.
FED: Barkin: DC Feels Like Texas In The 80s or Rust Belt In The 90s
Barkin on DOGE effects (with his district most impacted):
- Nationally the federal govt workforce is about 2% but in DC it’s ~25%. There’s a lot of worry of job losses going on.
- Some knock-on impacts: retail spending way down, commercial real estate was expected to rebound significantly but now concern on the other side about leases being canceled.
- Knock-on effect of additional sectors: federal spending roughly 90% checks written to state and local governments, universities, hospitals, contractors etc. There’s a lot of fear in the non-profit and university communities. It’s a little different in the contractor community, with some hit harder than others. From a local geography angle it feels a lot like Texas in the 80s and the Rust Belt in the 90s.
OPTIONS: Put Spread Selling Across German Futures And Euribor
Wednesday's Europe rates/bond options flow included:
- OEK5 118/117ps, sold at 13 in 9k
- RXK5 132/133 call spread, bought for 25 in 12k
- RXM5 129.5/127.5ps 1x2, bought for 7 in 2k
- ERM5 98.125c, bought for 4.5 in 17k
- ERU5 98.25/98.50/98.75c fly, bought for 3.75 in 8k
- 0RM5 98.125/97.9375ps, sold at 5.5 down to 5.25 in 10k
