⬇️ My Thoughts ⬇️
what's up with the "urging" the Fed to cut by 50 bps today? the rate cut is known NOW - and it will be no more & no less than 25 bps/0.25%. there is absolutely nothing to speculate about here i assure you that your urges won't affect what the market already priced in 😄
these dynamics create an incentive for further upward price pressure: ➖ purchase prices raise due to low rates and ample financing ➖rent prices raise because purchase prices become too high
i've previously written an article about what makes real estate so special in terms of funding/re-funding capacity banks finance ≈75% LTV on real estate purchases, and you can use existing properties as additional collateral 🧵read it here: https://illya.sh/threads/@1757632740-1.html
i've previously written an article about what makes real estate so special in terms of funding/re-funding capacity banks finance ≈75% LTV on real estate purchases, and you can use existing properties as additional collateral 🧵read it here: https://illya.sh/threads/@1757632740-1.html
it's not just the Fed, the ECB is also lowering rates into higher inflation this puts upwards pressure on both, real estate purchase and rent prices so you can expect both - house prices and rents - to increase throughout the next 2 years
it's not just the Fed, the ECB is also lowering rates into higher inflation this puts upwards pressure on both, real estate purchase and rent prices so you can expect both - house prices and rents - to increase throughout the next 2 years
how will asset prices react to Fed's interest rate decision? if the FOMC members suggest rates lower than in the June 2025 - expect an upwards rally in assets if the FOMC members suggest higher or non-decreasing near future rates - expect a downward rally/profit taking in assets
during the Sept 17th 2025 FOMC meeting, the Fed will publish a new dot plot with the suggested interest rates for 2025, 2026, 2027 and longer-term
during the Sept 17th 2025 FOMC meeting, the Fed will publish a new dot plot with the suggested interest rates for 2025, 2026, 2027 and longer-term
so the most likely outcome is a 25bp/0.25% rate cut on September 17th 2025, and then at least one more cut in 2025
so the most likely outcome is a 25bp/0.25% rate cut on September 17th 2025, and then at least one more cut in 2025
a cut larger than 25bp is highly unlikely, since the current CME's 30 Day Federal Funds Futures price strongly implies a 4.0%-4.25% target rate this is 25bp/0.25% below the current target rate of 4.25%-4.5%
a cut larger than 25bp is highly unlikely, since the current CME's 30 Day Federal Funds Futures price strongly implies a 4.0%-4.25% target rate this is 25bp/0.25% below the current target rate of 4.25%-4.5%
based on the current Fed policy guidance available since June 2025, by the end of 2025 the Fed Funds rate should be ≈3.9% current one is 4.25%-4.50%, so we either get a larger than 25bp cut or several rate cuts this year
based on the current Fed policy guidance available since June 2025, by the end of 2025 the Fed Funds rate should be ≈3.9% current one is 4.25%-4.50%, so we either get a larger than 25bp cut or several rate cuts this year
watch the Fed's projection dot plot, not the Fed Funds rate the 25bp/0.25% cut on September 17th 2025 will happen, and it's mostly priced in it's the future interest rate policy guidance that can amplify a market move either way
watch the Fed's projection dot plot, not the Fed Funds rate the 25bp/0.25% cut on September 17th 2025 will happen, and it's mostly priced in it's the future interest rate policy guidance that can amplify a market move either way
👋 hello, $3700 gold
just as charted: with the yellow line resistance broken gold has risen over 6% this thread covers the whole consolidation move, where i explained how it's a bullish precursor the original goal of this thread was to follow gold until it breaks $3.5K, and now we're 0.15K above 😄
after ECB's realized gains are booked to PnL, the ECB splits up the net profit as: ➖ up to 20% to the general reserve fund, which can be used to offset future PnL losses ➖ the rest distributed to the NCB's, proportional to the National Central Bank's paid-up shares
thus, unrealized gold gains accumulate on the ECB's liability side, under the revaluation account, and the only way they can be debited (e.g. to cover expenses, or credit an NCB's reserve account) is: 1️⃣ when the ECB sells the gold, thus turning an unrealized gain into a realized one 2️⃣ offset future losses in the gold bucket
thus, unrealized gold gains accumulate on the ECB's liability side, under the revaluation account, and the only way they can be debited (e.g. to cover expenses, or credit an NCB's reserve account) is: 1️⃣ when the ECB sells the gold, thus turning an unrealized gain into a realized one 2️⃣ offset future losses in the gold bucket
this means the ECB can only use unrealized gold gains to cover/offset future unrealized losses on gold these unrealized gains can neither offset an operational, nor a loss in another security bucket, such as FX
once a gain is realized, the corresponding proportion is debited to the revaluation account and credited to an income account/ booked to P&L at the end of the year PnL is closed into equity by increasing equity reserves and/or NCB liabilities
this means the ECB can only use unrealized gold gains to cover/offset future unrealized losses on gold these unrealized gains can neither offset an operational, nor a loss in another security bucket, such as FX
moreover, as per Eurosystem's accounting framework unrealized gains are non-distributable and may only offset future unrealized losses on the same item
moreover, as per Eurosystem's accounting framework unrealized gains are non-distributable and may only offset future unrealized losses on the same item
ECB's legal framework forbids the use of gold revaluation proceeds to pay expenses or operating losses unrealized gains are not recognized as income and are instead credited to the revaluation account revaluation account is under liability/equity on the ECB's balance sheet
ECB's legal framework forbids the use of gold revaluation proceeds to pay expenses or operating losses unrealized gains are not recognized as income and are instead credited to the revaluation account revaluation account is under liability/equity on the ECB's balance sheet
to clarify: European Central Bank didn't increase its gold holdings, but the gold that ECB already owns (≈506 tonnes) increased in value, since gold's market price increased ECB reevaluates gold at the end of every year and credits or debits the revelation account accordingly
🇪🇺 ECB gained €10.5B on gold from 2023 to 2024 2025 YTD running gains add another net positive ≈€10B & likely to be higher by the year end's gold revaluation that's an implied ≈8% yield on gold appreciation - much more than the ECB earned from other asset buckets
🇪🇺 ECB gained €10.5B on gold from 2023 to 2024 2025 YTD running gains add another net positive ≈€10B & likely to be higher by the year end's gold revaluation that's an implied ≈8% yield on gold appreciation - much more than the ECB earned from other asset buckets
leverage and the carry trades eventually unwind at some point there isn't enough on-demand liquidity and mass defaults, losses and insolvency occur this is when the cycle tops/bubble pops
the financial system is heavily dependent on refinancing this is true for both, governments and the public sector - especially the financial institutions ≈70% of all new credit is used for refinancing/repaying of existing maturing debt rather than novel financing
the financial system is heavily dependent on refinancing this is true for both, governments and the public sector - especially the financial institutions ≈70% of all new credit is used for refinancing/repaying of existing maturing debt rather than novel financing
in addition to being a store of value, gold is also acting as an investment it's up ≈40% YTD this is gold catching up to inflation and accumulated leverage
in addition to being a store of value, gold is also acting as an investment it's up ≈40% YTD this is gold catching up to inflation and accumulated leverage
the financial system infrastructure, including monetary policies of the central banks are correlated they're heavily exposed to the same set of assets - a lot of which are USD-denominated this is of course extremely pro-cyclical
the financial system infrastructure, including monetary policies of the central banks are correlated they're heavily exposed to the same set of assets - a lot of which are USD-denominated this is of course extremely pro-cyclical
gold is a great asset to hold for the next 5 years it's a hedge against the credit & refinancing bubble of the US equity markets + government debt but not only against USD - all FIAT & risk assets including crypto
gold is a great asset to hold for the next 5 years it's a hedge against the credit & refinancing bubble of the US equity markets + government debt but not only against USD - all FIAT & risk assets including crypto
since i've written this, gold is up ≈16% ≈25% if you count from the tariffs announcements on April 7th i will re-iterate that in order to protect the EUR the ECB should increase their onshore gold holdings
🇪🇺 The best countermeasure that EU can take is swapping US securities for Gold Gold is inversely correlated with USD. Such a decision can be done today and it will: 1️⃣be a response to the US 2️⃣increase value of EUR 3️⃣minimize consumer impact Anything else will hurt the economy