Yesterday US economy officially showed 2 times in a row of GDP decline which means technically we are in recession. Powell said balance sheet reduction will increase in September for 2 times up to 90 b$ per month.
Market reacted positive because of expectations of FED rates decline in February 2023 that is definitely a good news.
BUT technically there is an...
And here is why:
- rising FED rates: J.Powell said clearly that they will move rates to "neutral" so it means in the end of the year we'll see 2.5% or even 3% which I think is NOT already reflected in prices;
- sale of bonds: Starting June 1, the FED will sell $30bn of Treasury bonds and $17.5bn of mortgage-backed securities. From September, the volume of sales...
