Monday, March 16, 2020

Liquidity issues in the MBS and Treasury Markets

So what does this all mean?**
The fed, contrary to popular belief, is not trying to prop up the stock market. The fed is trying to propup the actual economy at this point with their actions. This isn’t necessarily a problem, however the issue is that if this continues, the Fed will run out of ammo, or worse, no one but the Fed is putting money into the system. This creates a cyclical effect where everyone is trying to get out at the same time, and you get crashes.
Variety of resources here that were talking about this before today:

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