The big news this month was the Fed announcement that the Central Bank intends to reduce their holdings of ETF’s and individual corporate notes. Selling secondary holdings can technically be defined as tightening, but in this case the size is tiny relative to their buying operations and can be explained away as an administrative adjustment. In individual corporate names they hold over 1,200 line items and about two dozen ETF’s, both investment grade and High Yield. We don’t expect the unwind to have any market impact at all. The bigger issue is that the Street has begun to speculate that at the June 16 FOMC meeting, the Fed will raise the rate paid on Reverse Repo and IOER by 5 basis points. In doing so, the Fed would effectively reset the T-Bill to about that same level, lifting it off of the 0.00% level at which it has been trading for months. The one issue potentially keeping the Fed from acting is their continued insistence on avoiding any form of tightening – perceived or real.
https://halyardmgmt.com/wp-content/uploads/2012/11/sails.png 774 449 halyard https://halyardmgmt.com/wp-content/uploads/2021/04/imageedit_11_9456000426-300x101.png halyard2021-06-16 14:55:072021-10-19 15:20:54May 2021 – Monthly Commentary