⬇️ My Thoughts ⬇️
the way I do it is by quoting the logically connected post, thus forming a chain of related posts if you build a DAG with temporal order & display posts from oldest to newest you get a thread of posts, forming a small article
so everything that I post on other social media, like X/Twitter also gets posted to my microblog at https://illya.sh/thoughts/ frequently an idea evolves into a series of posts - a thread/small article
so everything that I post on other social media, like X/Twitter also gets posted to my microblog at https://illya.sh/thoughts/ frequently an idea evolves into a series of posts - a thread/small article
🚀 added threads to my posts/thoughts & now you can read them as articles the static microblog now generates a series of quoted posts as threads, where posts are displayed from oldest to newest
🚀 added threads to my posts/thoughts & now you can read them as articles the static microblog now generates a series of quoted posts as threads, where posts are displayed from oldest to newest
Bitcoin is still in a weekly uptrend it must either go up or down to ≈$109500 - a strong weekly support two factors in play here: 1️⃣ USD index - inverse correlation 2️⃣ Global liquidity- correlation keep watching central bank's open market operations & balance sheets
🚀 gold approaching $3400. $3300 was a good price for longs - like I wrote a week ago currently gold is one of the only assets where leverage entails a much lesser risk upside price pressure is coming from several points
gold price is back up to its price 2 weeks ago so it indeed was a good idea to long it at the pullback
5 days ago I wrote that USD/RUB rate will fall. 5 days later it's down ≈2% despite oil being down - gold is up Ruble has hedge from multiple sides
if you've read my previous posts you know that gold is ≈36% of Russia's international reserves this is taken straight from the Bank of Russia's balance sheet statement 100% of it is stored in Russia, thus no counterparty risk critical component of Ruble's strength
🇨🇳 China's gold holdings are at their highest level in 43 years gold is now 6% of PBoC international reserves. but that's still below the world average of ≈14%. expect that gap to continue to shorten further see my drawings on this nice chart spanning over 47 years i found
both Russia & China increased their gold holdings since I wrote this 😄 indeed - central banks are continuing to buy the gold dips
central banks will continue to buy gold you'll be able to confirm that in their upcoming balance sheets reports. pay special attention to China & Russia enjoy the dip, because smart money is!
China sold US treasuries and bought gold - just like I wrote over 3 months ago gold now accounts for ≈6% of PBoC international reserves, while US treasury holdings are ≈40% from their peak in 2013 off-ramp from USD debt to alternative assets continues its progress
🇨🇳China has been increasing their gold reserves YTD Gold price keeps going up - major central banks continue to load up Gold is a hedge against USD. Tariffs are a medium of USD weaponization 👉 Expect US securities sell-off for gold by People's Bank of China
the 70% USD dominance here is as calculated by the Fed across the chosen 5 chosen buckets - with the end result being a weighted composite measure so don't read this as a literal 70% of all cross-border transactions
🇺🇸 USD dominance is alluring, accounting for ≈70% of currency usage worldwide even countries that do relatively little trade with US have most of their transactions done in US dollars ex: 🇮🇳 India invoices 86% of its exports in USD, while only 15% of its exports being to US
🇺🇸 USD dominance is alluring, accounting for ≈70% of currency usage worldwide even countries that do relatively little trade with US have most of their transactions done in US dollars ex: 🇮🇳 India invoices 86% of its exports in USD, while only 15% of its exports being to US
legally mortgage backed securities are bonds since they are tradable debt securities but they're not a plain bond, due to the option of borrower's early repayment Macaulay or modified duration used for Treasuries doesn't work - you need effective/option-adjusted duration
the duration formula for MBS assumes for some pre-payments if those happen at a smaller rate - the duration increases
the duration formula for MBS assumes for some pre-payments if those happen at a smaller rate - the duration increases
raising yields means lower incentives to re-finance mortgages which reduces the amount of pre-payments thus, the duration increases when yields are raising - so even a higher price decrease
raising yields means lower incentives to re-finance mortgages which reduces the amount of pre-payments thus, the duration increases when yields are raising - so even a higher price decrease
optionality/convexity premium in mortgage backed securities is interesting when market yields fall the price should rise, but since borrowers take advantage of lower mortgage rates to make early payments - the price does not raise as much, due to lowered duration
optionality/convexity premium in mortgage backed securities is interesting when market yields fall the price should rise, but since borrowers take advantage of lower mortgage rates to make early payments - the price does not raise as much, due to lowered duration
Fed's balance sheet expansion with agency MBS reduced risks in liquidity, market depth and optionality/convexity this is a crucial point to understand - it wasn't just the Fed buying agency MBS, but the explicit government guarantee that accompanied it thus, the yields fell
Fed's balance sheet expansion with agency MBS reduced risks in liquidity, market depth and optionality/convexity this is a crucial point to understand - it wasn't just the Fed buying agency MBS, but the explicit government guarantee that accompanied it thus, the yields fell
Ginnie & Fannie Mae conservatorship in Sept 2008 made agency MBS default risk free essentially, the US Treasury covers all losses from GNMA and FNMA up to $200 billion each from the total $400B budget ≈$170B are still available once exhausted it will surely be increased
Ginnie & Fannie Mae conservatorship in Sept 2008 made agency MBS default risk free essentially, the US Treasury covers all losses from GNMA and FNMA up to $200 billion each from the total $400B budget ≈$170B are still available once exhausted it will surely be increased
to lower the mortgage rates the Fed can purchase agency MBS - likely they did in QE 1 2008 buying mortgage backed securities raises their price and provides liquidity for dealers. this directly pushes down the yields expect some MBS QE to come in the near future
to lower the mortgage rates the Fed can purchase agency MBS - likely they did in QE 1 2008 buying mortgage backed securities raises their price and provides liquidity for dealers. this directly pushes down the yields expect some MBS QE to come in the near future
gold hasn't broken the weekly uptrend - note the higher highs buying pressure today pushed the price up ≈2.5% TA is an excellent tool to gauge the price action
gold price is back up to its price 2 weeks ago so it indeed was a good idea to long it at the pullback
gold price is back up to its price 2 weeks ago so it indeed was a good idea to long it at the pullback
consider this gold pullback as a free gift to further extend your long position 🥳
if you've read my previous posts you know that gold is ≈36% of Russia's international reserves this is taken straight from the Bank of Russia's balance sheet statement 100% of it is stored in Russia, thus no counterparty risk critical component of Ruble's strength
🇺🇸🇷🇺 USD/RUB rate already fell to July 24th close, below 80 although it's also important to note that there are several factors at play - USD index is also down today despite oil down - gold is up. this is about the monetary policy of Russia and their balance sheet structure
🇺🇸🇷🇺 USD/RUB rate already fell to July 24th close, below 80 although it's also important to note that there are several factors at play - USD index is also down today despite oil down - gold is up. this is about the monetary policy of Russia and their balance sheet structure
🇷🇺 oil up is GOOD news for Russia & Ruble every surplus above $60/barrel of Urals oil increases FX reserves in NWF (Yuan or gold) - an interplay between MoF and CBR exporters pay taxes in Ruble - so higher buying pressure mark my words: 👉 you'll see USD/RUB exchange rate fall
and this is how the Federal Reserve steers the federal funds rate/interest rates in the market within the target range 🏦✨ follow the quoted posts to read the full thread/article
together, ON RRP, IORB, Discount Rate and SRF create a corridor for rates, which stay within the target 4.25%-4.50% 👉 by "firms" i mean select non-bank financial institutions - think dealers, market makers & other wholesale debt institutions
together, ON RRP, IORB, Discount Rate and SRF create a corridor for rates, which stay within the target 4.25%-4.50% 👉 by "firms" i mean select non-bank financial institutions - think dealers, market makers & other wholesale debt institutions
current rates set by FED: 1️⃣ ON RRP - 4.25% (floor) - firms won't lend below 2️⃣ IORB - 4.40% (supplementary floor) - banks won't lend below 3️⃣ Discount Rate - 4.50% (ceiling) - banks won't borrow above 4️⃣ SRF - 4.50% (supplementary ceiling) - banks & firms won't borrow above
current rates set by FED: 1️⃣ ON RRP - 4.25% (floor) - firms won't lend below 2️⃣ IORB - 4.40% (supplementary floor) - banks won't lend below 3️⃣ Discount Rate - 4.50% (ceiling) - banks won't borrow above 4️⃣ SRF - 4.50% (supplementary ceiling) - banks & firms won't borrow above
so how does the FED currently targets an interest rate range between 4.25%-4.50%? let's consolidate everything with an example using current, real-world data
