Parleremo poco delle Banche Centrali, nei prossimi mesi.

La settimana prossima, in particolare, parleremo ancora di BCE, in vista della riunione di giovedì prossimo.

E poi basta: completato questo Post, per un paio di mesi non ci saranno altri commenti.

La ragione? Non c’è davvero più nulla da dire. Le Banche Centrali, nel corso degli ultimi mesi, hanno perso in modo progressivo ogni importanza, per i nostri investimenti, per i nostri portafogli, e per il futuri rendimenti.

Spieghiamo il perché. I dati, ormai, ci dicono tutto: non ci sono più dubbi, non ci sono più interpretazioni possibili, non ci sono più dibattiti. In aggiunta a questo, non ci sono più mosse, iniziative, spazi di manovra che le Banche Centrali possano agire. In poche parole: è finita.

Dice molto chiaramente Mohamed El Erian, qui sopra nell’immagine della settimana scorsa, che sono tre i fattori che hanno sostenuto i mercati finanziari nel primo semestre del 2021:

la forza della crescita economica
la convinzione che l’inflazione fosse “transitoria”
la fiducia che le Banche Centrali avrebbero mantenuto elevata la liquidità del sistema

Alla metà del mese di luglio 2021, si può affermare con certezza che:

nessuno crede più alla forza della crescita economica: non c’è, e non è mai esistito, un boom economico
tutti sappiamo che l’inflazione non è, e non è mai stata, transitoria
le Banche Centrali hanno enormi problemi con la liquidità elevata: anche, ma non solo, per ciò che sta scritto qui sopra al punto 2

In sostanza, possiamo affermare che le Banche Centrali, alla luce dei fatti come li conosciamo al luglio 2021, le hanno “cannate” tutte. Ma proprio tutte tutte. Proprio un anno fa in questo Blog vi abbiamo scritto che “la Federal Reserve è il peggiore nemico della vostra stabilità finanziaria”. Ed eccoci qui.

Per non ripetere cose che noi abbiamo già scritto, affidiamo all’articolo che segue il punto sui “temi di mercato” alla metà del luglio 2021.

Jeffrey Gundlach of DoubleLine Capital said it is no mystery why U.S. Treasury yields are anchored lower despite evidence that inflation is rising in an economy attempting to rebound from a stultifying pandemic.

Speaking to CNBC’s Halftime Report on Thursday, Gundlach said that the financial system remains awash with liquidity, i.e., willing buyers, who seem eager to purchase benchmark government debt, a factor that has been a key reason in driving prices up and yields commensurately lower.

“Yields are this low because of all the liquidity in the system,“ Gundlach told the business network.

The 10-year Treasury note was yielding around 1.32% Thursday afternoon after touching around 1.7% just about two months ago.

In theory, yields should be higher because the Federal Reserve has signaled that it is considering ending its asset-purchase program, which includes some $80 billion in Treasurys a month. The Fed’s quantitative easing, or QE, has helped support financial markets during the worst of the pandemic-driven disruptions last year.

But the prospect of the cessation of QE and surging inflation, which erodes a bond’s fixed value, should be sparking selling in Treasurys and pushing yields higher and prices lower.

Gundlach, however, said that buying from pension funds, foreign buyers and other investors continues to be robust and is providing substantial support for lower yields, even as the Dow Jones Industrial Average the S&P 500 index and the Nasdaq Composite are trading near record highs.

Gundlach said “banks are so flush with deposits” and that is creating dislocations in areas of financial markets. Indeed, demand in the New York Federal Reserve’s overnight reverse repo program (RRP) has begun flirting with record levels around $1 trillion.

The Fed’s reverse repo program lets eligible institutions, like banks and money-market mutual-funds, park large amounts of cash overnight at the Fed, at a time when short-term funding rates have fallen to next to nothing, and finding a home for cash has become harder.

The repo operations have been soaking up some of the excess liquidity currently overwhelming U.S. money-market funds, which have been flooded with cash this year, market participants note.

On Thursday, Federal Reserve Chairman Jerome Powell told Senate lawmakers, as a part of a semiannual report to Congress, that inflation has been a bit of surprise for monetary policy makers.

“This is a shock going through the system associated with reopening of the economy, and it has driven inflation well above 2%. And of course we’re not comfortable with that,“ Powell said.

That said, Powell, and other Fed officials, have characterized rising prices as temporary, highlighted by the consumer-price index climbing 0.9% in June, with the rate of inflation in the 12 months ended in June rising to 5.4% from 5%, marking the fastest climb since 2008, when oil hit a record $150 a barrel.

Gundlach says that pension funds aiming to invest the liquidity provided by fiscal stimulus during the pandemic have been increasingly turning to longer-dated Treasury buying.

Still, despite the anomalies taking shape in the market, the DoubleLine boss said that he was still a buyer of stocks. “I think you’re OK holding,” he said, noting that he has reduced his levels of cash and dialed up his equity holdings.

He said doing so was sensible until such time as the market gets more clarity on future federal spending plans.

He said that he didn’t think inflation was going away but described a precarious situation for the U.S. central bank which may remove its accommodative measures to tamp down inflation only to risk seeing the still-unsteady labor market wobble.

Gundlach said that the Fed thus far has already proven itself wrong about one thing: its definition of “transitory.” He said that policy makers had initially described “transitory” as one or two months but “now transitory is six to nine months.”

I think that some Fed officials are coming around to the view that this “inflation is going to stay around longer than they thought.”

“Jay Powell is still wishing, hoping, praying that this [inflation thing] goes way,” Gundlach said.

“The bond market seems to be thinking that the Fed is going to get religion…about inflation,” he said

Nelle poche righe dell’articolo qui sopra, c’è tutta per intero l’attualità. L’oggi. Lo stato delle cose.

Come da sempre facciamo, noi qui nel Blog ci occupiamo invece del futuro: di quello che accadrà domani, e nei prossimi mesi, da qui alla fine dell’anno. Come detto (e come spiega anche benissimo l’articolo) ormai la Fed sta fuori da quadro, in un contesto come quello descritto dall’articolo non conta più nulla. Le sue scelte sono obbligate, le sue scelte sono limitate, e le sue scelte sono condizionate. La Fed è in un angolo, come questo Blog scriveva già mesi fa. Insomma: in questo preciso momento di mercato, la Fed non conta più nulla: è fuori dai giochi.

Guardando al futuro, ma riprendendo l’articolo che avete appena letto, c’è una cosa che va chiarita e precisata. Gundlach dice nell’articolo che “i rendimenti dei Titoli di Stato sono scesi a causa della abbondante liquidità nel sistema”. E si sbaglia.

I rendimenti dei Titoli di Stato sono scesi per una ragione diversa, e ben più importante: il mercato obbligazionario ha le idee chiarissime su una cosa. Che è la seguente: l’inflazione dovrà scendere, per forza: non c’è alternativa. Può scendere se rallenta in modo violento l’economia, può scendere se l’inflazione sale sopra il 10% e provoca un crash, oppure può scendere perché la Federal Reserve fa una completa marcia indietro sulla liquidità.

In entrambi i casi, l’economia rallenta, e di molto.

Ed ecco spiegati i rendimenti in discesa.

Questa considerazione spiega anche perché oggi, per noi investitori, la Federal Reserve non conta più nulla: non saranno loro a scegliere. Come scritto nell’articolo qui sopra, ogni giorno Jay Powell prega con le mani giunte che l’inflazione si fermi … da sola, ma non succederà. E saranno altri fattori, a decidere quello che poi accade: non sarà la Federal Reserve (né la BCE).

Per questa semplice ragione, nelle prossime settimane non commenteremo più la Federal Reserve: perché per le nostre e le vostre performances quello che dice oppure fa la Federal Reserve non conta.

E’ di altro, che oggi un investitore si deve occupare.

Per chiudere il Post, vi regaliamo in lettura un articolo pubblicato, pochi giorni fa (ma prima degli ultimi dati per l’inflazione), da Mohamed El Erian: dove trovate già scritto tutto, è sufficiente leggere in modo attento e non superficiale.

The writer is president of Queens’ College, Cambridge and an adviser to Allianz and Gramercy

The sharp drop in yields on US government bonds seen last week is good news for stock investors, or so you would think given recent experience. But that was not the feeling in markets on Thursday with a broad-based sell-off in equities, leading more people to start asking the key question of whether we could be having too much of a good thing — that is, interest rates that are artificially very low for too long.

The question becomes even more important as investors get ready to digest this week news on inflation and US Federal Reserve policy. Ten-year Treasury yields plummeted from around 1.70 per cent at the end of the first quarter to 1.25 per cent during Thursday’s trading session before recovering somewhat on Friday.

Three main explanations have been suggested for this counter-intuitive move given higher growth and inflation outcomes. The most worrisome is that the markets are pricing a significant deterioration in growth prospects due to less strong data in China and the US, and concerns about the spread of the Covid Delta variant in Europe and much of the developing world. Yet it is hard to argue that these headwinds to the global recovery warrant such a move down in yields, let alone the very low levels of both nominal and real rates.

The second is policy related, centred on the European Central Bank’s signal of a somewhat more dovish policy stance. Again, it is hard to argue consistency with the extent of the move. Also, the ECB announcement coincided with the release of Fed minutes that confirm a slightly less dovish tilt there.

The third, technicals-based explanation for the move down in yields seems more convincing. The more yields fall in such a counter-intuitive mode, the greater the pressure on those brave souls that were still betting bond prices would drop, or who were underweighting their benchmark indices. There might also have been belated buying from pension funds that have given up on waiting for better entry points to buy assets to match liabilities.

Indeed, the abrupt nature of last week’s market moves were consistent with “capitulation trades” — as in, “I don’t care about the levels, just get it done”. For a while now, stocks investors have embraced unnaturally low yields, the centrepiece of central banks’ prolonged reliance on unconventional policies. They reduce the debt burden of companies, allow for very easy debt refinancing and open up all sorts of possibilities for mergers and acquisitions as well as initial public offerings. They also facilitates good old-fashioned financial engineering that alters capital structure in favour of shareholders relative to creditors.

So what follows the markets’ sudden bout of indigestion? The most likely answer is a short-term rebound driven by three behavioural themes that have deeply conditioned investors: TINA, or there is no alternative to stocks with yields so very low; BTD, buy the dip as the liquidity wave continues; and FOMO, fear of missing out on yet another move up in stocks. While the most probable outcome in the short-term, this should not preclude forward-looking analyses of two associated risks.

The first relates to so-called “de-grossing” — that is, simultaneous reductions in risk-taking positions led by those have bet on an improving economy with the “reflation trade”. That would involve cutting overweight positions in risky stocks and underweight exposures in risk-free government bonds, the result of which would be adverse contagion for a bigger set of financial assets. The other, more worrisome possible future extension of recent events is that the economy and the financial system may have already experienced too much of a good thing.

With the Fed already behind on inflation and with supply side problems proving more persistent, there is growing concern that the more the central bank waits to taper its $120bn of monthly bond purchases the more likely it will be forced into slamming the policy brakes on at some point. In the meantime, speculative excesses would have built up further, more resources would have been misallocated across the economy, and more unsustainable debt would have been incurred. What is clear to me is that we are moving irresistibly closer to a critical question for the economy and markets, and not just in the US: is there still the possibility of an orderly exit from what has been a remarkably long period of uber-loose monetary policies?

Perché non parliamo più della Federal Reserve