Liz Mccormick, FED, Castle Systems discussed on Bloomberg Markets


Last month According to data from castle systems and office security firm that records workers coming and going to my measuring bad swipes into skyscrapers and corporate campuses which begs the question what are Austin office workers doing the other you know what 40% of the time when they're not in the office I would posit that they're probably a green hall in the hill country Watching the bands play and dancing the two step across Texas That's a Bloomberg business flash Bloomberg markets continue now with Paul Sweeney and someone who knows about the Texas two step That's pretty cool I'm gonna say you threw that in just for me didn't you Greg Jarrett Yes I did This is the big take the best of Bloomberg's in depth original reporting from around the globe This is a really fast moving story Of course a lot of outrage among investors This is so fascinating The market shut down in a way it's never done before That's going to have consequences for years to come The big take on Bloomberg radio Bloomer markets is brought to you by Commonwealth high supporting more than 2000 independent financial advisers with the solutions they need to grow with thriving business Commonwealth Go where you grow visit Commonwealth dot com to learn more We've got a treat here today Don't we agree Liz McCormick in the Bloomberg interactive broker studio one of our top reporters and she's got the big take story Liz McCormick chief correspondent for global macro markets and Bloomberg news joins us with the big take story Again Liz thanks so much for joining us here The fed's raising rates I'm going all cash I mean what's going to happen I know It's been a while Are you scary Some are used to low rates for their whole lifetime I won't say that I am I'm dating myself but yeah the fed's raising rates and me and some colleagues wrote in this big take It's not just rates that are going up but the fed and other leading central banks are kind of pulling back another punch bowl which is their balance sheet All those bonds they bought which was kind of the second whammy to help bring rates down and keep us from a protracted recession after 2020 the pandemic is all going in the opposite direction So it's a little bit mind bending Liz I have to ask about the balance sheet We asked Priya mister this earlier and she was like yeah nobody knows what's going on What is going on I love Priya And if she doesn't know but you know I kind of follow our Craig Torres and his stories And the minutes from the fed's last meeting they kind of laid out let's see if they surprise us that they're going to pretty quickly go to about 95 billion a month 60 billion treasuries up to 30 billion MBS rolling off each month And that's about a trillion a year at that pace So we think they're going to announce at Wednesday's meeting and say maybe they start in June And that's much quicker than they did in 2017 to 2019 when they were rolling back the balance sheet So it's faster Plus we have other central banks rolling back which we didn't have back then So to be clear that means when you say rolling back that means they're not actively selling it on the market they're just not reinvesting Right So right now when they mature they reinvest them with the treasury Let's talk just treasuries And what they're going to do is further treasuries They're just going to let them mature and go away They won't buy new ones MBS works a little bit different It depends on how fast people prepay their mortgages but that they want to the MBS holdings to kind of siphon down as well And that was one of the fears right That they would sell on the market which is a completely different dynamic Right But it's kind of complicated because they have flicked at that down the line Again MBS works a little different It's not like it matures on their balance sheet It's when people prepay And if rates go up you know how people don't prepay their mortgages because when they're going down everyone's like oh I can get a better mortgage rate And when they're going up people do that more slowly So the fed at the end has said possibly down the road we might have to sell some of our mortgage backed securities If they don't kind of go away fast enough But that's further down the line you know Do you think 75 basis points is still on the table for a move here Yeah so 50s a lock at this meeting I think where you know they're looking at maybe the markets pricing kind of some chance of 75 is that the next meeting So this is may then June But basically overall it's amazing There's about 250 basis points of hikes priced in through just the end of the year And that's pretty fast for the fed We haven't seen that kind of pace in a long time Do you think it's still valid or is it a valid issue that the fed is behind the curve I'm not sure how you define that but behind the curve Well who was it James bullard who's been very boisterous we know I think he said hey we're not but one of the fed officials said we're not as behind the curve as people think It's water under the bridge in a way now because they're really trying to catch up But.

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