surged. However, the big news came yesterday when Jay Powell noted that it would take longer for the Fed to gain the confidence needed to start the rate-cutting process because the progress onthe first rate cut coming in November, pricing in fewer than two rate cuts in 2024. I’m sure this must be a stunning turning event for readers of this commentary, but that is what is happening right now. It’s hard to believe that the Market saw more than 7 in December.
It was a horrible blunder, even at the time. Unless there was some hidden goal, such as draining the reverse repo facility, which is now nearly completed, it could even be complete; going back to, say, 2014, it used to average around 125 billion a day, and so it is possible that it may not go completely back to zero.
It is an interesting scenario and one we haven’t seen much of that I can remember. One would think, though, that the 5,000 strike price could serve as a magnet pulling the index lower. Meanwhile, there is a $12 billion delta put position up at 5,100 and a $10 billion delta put position at 5,000., which the ETF typically buys back the day before opex is looking like it may be a non-even this month, as the notional value of the call is worth a mere $2.
Finally, as taxes came in, the TGA rose to around $900 billion yesterday. That number will probably continue to climb over the next day or two and could top out at around $1 trillion. Last Wednesday, that value was at $672 billion, and so we are talking about a sizeable increase in the TGA of around $275 billion or so.
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