Luke Gromen: USD faces day of reckoning when it becomes clear Fed will have to monetize gov’t deficits

Macro Voices, Released on 9/3/19

Topics:

  • Oct 12, 2018: A date few noticed but we all should: The USD “insurance” market effectively went no-offer
  • Why FX-hedged relative yields are so important
  • Consequences of FX-hedged UST yields turning negative
  • Where we stand: 7th, 8th or 9th inning?
  • The mechanics: What should we expect from markets when the Fed is forced to monetize deficits?

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