Faster Balance Sheet Runoff, Steep Rate Hikes Have Markets Spooked - LIVE from San Diego

Real Vision: Finance & Investing

Real Vision

Business News, News, Investing, Business

4.1 • 1.1K Ratings

🗓️ 7 April 2022

⏱️ 33 minutes

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Summary

Minutes to the Federal Open Market Committee’s March meeting reveal that the U.S. central bank plans to begin reducing its balance sheet as soon as after the FOMC’s May meeting. Policymakers discussed monthly caps for asset runoffs, $35 billion for mortgage-backed securities and $60 billion for Treasuries. The plan includes a phase-in period of three months, or modestly longer, but the monthly total cap of $95 billion is significantly higher than the last time the Federal Reserve tried to shrink its balance sheet. The Fed’s hawkish tone was underscored by the fact that multiple members conceded that at least one rate hike of 50 basis points may be warranted and that they might have voted for one of that magnitude in March but for Russia’s invasion of Ukraine presenting a new challenge to growth. U.S. equity markets slipped further into the red following the minutes’ release, while the yield on the 10-year Treasury note jumped to a three-year high. Real Vision is in San Diego for this week’s Macro Experience event, where we continue to meet face to face with some of our favorite guests. Julian Brigden, co-founder of MI2 Partners, joins Maggie Lake to discuss the FOMC minutes and the central bank’s efforts to fight inflation while supporting growth on today’s Daily Briefing. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3NLQFsR. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	Hi, everyone. Welcome to the Real Vision Daily Briefing. Once again, live from the macro
0:10.4	experience here in the Fairmont Grand Fairmont Del Mar. And here with me today is none other
0:17.9	than... I was going to try to invite some Julian Brichten, MI2. Julian has the honor or the
0:25.6	torture of going fist-to-fist with Raal and macro insiders. Not an easy job. Not an easy job. But
0:32.5	is somebody that's on the platform and we're so happy he's been here and involved in a lot of
0:36.6	great sessions. Julian, welcome to the Daily Briefing. Thank you very much Maggie. It's your first
0:40.2	time. It is. Yes, it is. You pop the cherry. Well, we're so happy to have you. So first of all,
0:47.2	there's some stuff going on in the markets, but just give me a sense of how it's been for you. You've
0:51.8	been presenting. You've been talking to a lot of people. You've been on panels. It's a fantastic
0:58.7	experience. It's been great. I mean, really, the glitter artsy of the macro space that you guys
1:06.6	have managed to pull together, which is, you know, I don't know quite now. How I ended up here,
1:10.0	but thank you for having me. It's been a really great experience. I think a couple of the panels
1:14.7	have really stood out where people have really been involved in interactions. And we had one,
1:19.2	I think the first one yesterday morning, there's the one that sort of struck me a lot. I wasn't
1:22.7	involved in that at this end. I was great. And just to hear people's, there are many things that
1:28.0	people agree on, I think. It's always this question of timing. And this to me is always the big
1:34.9	imponderable, right? Well, and I sit, frequently sit on macro insiders. And we have the same view.
1:40.3	We disagree on timing. And it's said, but for some of us listening to it, it sounds like you
1:45.8	have completely divergent views because of that. I've asked Raul about that, too. Because I'm like,
1:50.8	how are you, you seem like you're, you're talking about, you know, the same questions. I have
1:55.3	completely different worldviews, but, but we don't. Often it comes down to the time. Yes. Yes.
2:00.7	So I think that was a very interesting conversation. And I think, you know, people are still in this sort
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