Quantitative tightening | 08 tháng tư 2022

08 tháng tư 2022, GBP/USD

Quantitative tightening

GBPUSD trading plan:

The Federal Reserve signaled it will likely start culling assets from its $9 trillion balance sheet at its meeting in early May and will do so at nearly twice the pace it did in its previous "quantitative tightening" exercise as it confronts inflation running at a four-decade high. The Fed appears poised to kick off this QT round just one meeting after lifting its benchmark short-term interest rate for the first time since 2018. Last time, the launch of QT in the fall of 2017 occurred nearly two years after its first-rate hike, which took place in December 2015. This time's onset of QT is also earlier relative to where the Fed will be in the overall tightening process. If rate futures are a guide, the Fed will lift its target rate to 0.75-1.00% in May at the same time it kicks off QT. Last time, QT did not begin until rates had reached 1.00-1.25%. Fed officials "generally agreed" on a plan to cut about $95 billion a month from its holdings, split between $60 billion of Treasuries and $35 billion of MBS. That is roughly double the maximum pace of $50 billion a month targeted in the 2017-2019 cycle. Back then, the split was $30 billion of Treasuries and $20 billion of MBS.

Investment idea: sell 1.3095 and take profit 1.3020.

David Johnson
Analyst of «FreshForex» company
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