'Bloomberg) -- The Federal Reserve can look past low liquidity in the Treasuries market and continue with its rate hikes, according to strategists at JPMorgan Chase & Co.'
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JPMorgan Says Treasuries Coping Amid Worst Liquidity Since 2020, March 22, 2023
'Another difference was that the banking system remains awash with €4tn of excess liquidity, stemming from years of vast bond purchases and ultra-cheap lending by the ECB.''Nagel, who became Bundesbank president at the start of last year, downplayed the risk of contagion to the eurozone’s “resilient” banking system. “We are not facing a repeat of the financial crisis we saw in 2008,” he said. “We can manage this.”
Nagel displayed little sympathy for owners of SFr16bn ($17bn) of additional tier 1 (AT1) bonds in Credit Suisse, which were wiped out by Swiss authorities as part of the UBS rescue-takeover.
“Those who profit from opportunities should also take their share when risks materialise,” he said. “This was one of the takeaways from the global financial crisis.” But he confirmed that the eurozone would not follow the Swiss decision to bail in AT1s before a bank’s equity was wiped out.
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Another difference was that the banking system remains awash with €4tn of excess liquidity, stemming from years of vast bond purchases and ultra-cheap lending by the ECB.
The bank this month started to shrink its bond holdings by not replacing €15bn of the securities that mature each month in its €3.2tn asset purchase programme.
But Nagel, whose first job at the Bundesbank involved calculating excess liquidity levels, wanted to go faster. “We should do more,” he said, when the council reviews the strategy in July.
He added that “at a later stage” the ECB could also consider shrinking a separate €1.7tn pandemic emergency purchase programme, launched in 2020 to counter the fallout of the Covid-19 pandemic.'
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Bundesbank chief says rate-setters must be ‘more stubborn’ in inflation fight, March 22, 2023
Context(Banking Reform) - 'Financial regulators have ignored their post-2008 rule book to contain the latest banking panic.' - '..a “monstrous” (according to Clemente de Diego) legal institution..'(Global Stagflation) - '..the Federal Reserve "must unwind" its extraordinary funding facility .. encourages future irresponsible behavior..'(Global Stagflation) - UK inflation jumps to 10.4%, surprising analysts - 'Food prices jumped 18%..'(Global Stagflation)(QE Was a Colossal Policy Mistake) - '..wage earners have to get a 14.8 per cent wage increase just to hold even with this kind of inflation..'(Banking Reform)(Ethics) - 'A stable financial system .. [doesn't] exist in the U.S.' - The Wall Street Journal Editorial Board