Posted on 05/17/2025 2:26:19 PM PDT by NoLibZone
The U.S. Federal Reserve just pulled off something stealthy — over four days last week, without fanfare, the Fed vacuumed up $43.6 billion in U.S. Treasurys. That’s $8.8 billion in long-dated 30-year bonds on May 8 alone, plus another $34.8 billion earlier in the week. Not exactly small change.
Quietly returning to the quantitative-easing trough isn’t standard Fed housekeeping — it’s like a bank robber returning to the scene because he forgot his car keys.
Let’s talk straight: This isn’t tightening. It’s stealth easing. It’s monetary policy on tiptoes. Some traders have begun to notice, and smart investors should too.
Commodity traders, in particular, have a nose for monetary sleight-of-hand. Gold GC00 +0.57% , the ultimate financial cynic’s metal, has risen sharply since early 2024. Gold doesn’t believe in politicians, central bankers or economists — even the Ivy League types who wave their hands and promise stability. It believes numbers.
But this isn’t just a U.S. game. China has jumped into the gold pit too, and brings a bigger shovel. China’s central bank just cranked open the vault doors by dramatically raising gold-import quotas, letting local banks swap U.S. dollars DX00 -0.10% directly for bullion.
(Excerpt) Read more at marketwatch.com ...
The Fed does not buy Treasuries at auction; they buy them in the secondary market.
The PE ratio of the S&P 500 is much lower than in 1929 and much, much lower than in 2000.
Are you saying buying from ourself and selling to ourself is a good thing?
Like I said, I never understand the bond market but this seems smelly, like something a financial scam artist would do.
Someone must agree, as the AAA rating has been dropped by at least one rating service.
“Why is the Fed quietly buying billions in bonds — and hoping nobody notices?”
They do it all the time. They don’t care who notices, everyone in the money biz knows.
Believe Powell is a lot more then 2% of the problem he’s stifling money movement.
“ Are you saying buying from ourself and selling to ourself is a good thing?”
The Fed has always bought treasuries
“if China converts into gold a modest 10% of the $784 billion Treasury stash it held as of February, it would send tremors through global markets.”
The Fed bought $3 Trillion of Treasuries in three months, within recent years.
It can absorb less than a trillion from China, but China cannot afford to sell all its Treasuries, because it needs those dollar accounts to clear shipments at ports, and keep its products flowing..
That and owning gold was illegal.
Are there lots and lots and lots of choices besides newly downgraded US bonds for these picky institutional investors to choose fr ok m other than the US bonds? Are they historically as safe as US bonds and available in institutional purchase quantities? I’m th8nking they will change their standards before they wholesale abandon buying US securities.
Yes that and my biggest regret is not buying gold at $35/oz when it became legal.
Now post price versus earnings.
In my honest opinion, US Treasury bonds are safer because the federal government has 2 powers.
1. Taxing power
2. Money printing power
none of the private companies have that those powers. Big companies have gone bankrupt in history. Federal government will be the last man standing.
I did based on inflation adjusted history of past 10 years.
You are imagining P/E based on PROJECTED earnings. Only Nostradamus knows future earnings for sure. In simple words, you are making assumptions for future, which is a risky proposition.
Now you try it.
OK they don't publicize it, but all transactions are a matter of public record.
It's worth knowing (and might be a bad sign) but the implication of secrecy is just journalistic jive.
I kind of doubt that. Most commercial debt is not AAA.
Sure, you will likely get your dollars back. But they are debasing the value of the dollars so you won't get the value back. That's where truly scarce alternatives (gold/bitcoin etc) stand out, which is probably why they get a mention in the headline.
I have nothing against you investing in stocks. I am at age 85, and have different objectives. My fearless prediction is SPX500 drops by 25% from current levels within 12 months.
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