The Fed has no choice but to raise interest rates and crush the market

Tsing Tao said:
Oh no, you've followed me....am I that interesting to you?

The Fed doesn't have to sell anything. It can just take a loss. Just like the ECB will do.
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Why does the Fed have to take a loss? Maybe on a MTM basis but why can't they just hold to maturity?

ADD: Obviously, if housing blows up again, the Fed would take a loss on any paper in which there are defaults with respect to RMBS they have purchased that is not Fannie, Freddie or GNMA.
 
WeToddDid2 said:
Why does the Fed have to take a loss? Maybe on a MTM basis but why can't they just hold to maturity?

ADD: Obviously, if housing blows up again, the Fed would take a loss on any paper in which there are defaults with respect to RMBS they have purchased that is not Fannie, Freddie or GNMA.
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If rates rise, they would take a loss. Even if they hold to maturity, they've essentially taken a paper loss (as they overpaid for the asset). Regardless, it's not that big of a deal for the Fed.
 
wanted to see whether your balls are getting squeezed elsewhere also ;-)

Sure it can, you mean with the same standing power than SNB? That went pretty fast down the river...but of course the Fed is a big boy they will somehow be able to a loss in the hundreds of billions. Let me see...about 4.2tln USD securities held outright (notional). A mere 10% in revaluation will only cost the government 400bln USD. Hold on, that is only 16 years of what it has paid out on average to the treasury. Let's see whose budget is gonna get smashed to make room for such hole. And we only talk about 10% revaluation. For beginners that is about the amount US treasury securities with approx. duration of 20 years have appreciated in past 2.5 months....but hey, if you say treasury just writes the cheque and all is fine then I of course believe you (not)...

Tsing Tao said:
Oh no, you've followed me....am I that interesting to you?

The Fed doesn't have to sell anything. It can just take a loss. Just like the ECB will do.
More...
 
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volpunter said:
wanted to see whether your balls are getting squeezed elsewhere also ;-)

Sure it can, you mean with the same standing power than SNB? That went pretty fast down the river...but of course the Fed is a big boy they will somehow be able to a loss in the hundreds of billions. Let me see...about 4.2tln USD securities held outright (notional). A mere 10% in value will only cost the government 400bln USD. Hold on, that is only 16 years of what it has paid out on average to the treasury. Let's see whose budget is gonna get smashed to make room for such hole. And we only talk about 10% revaluation. For beginners that is about the amount US treasury securities with approx. duration of 20 years have appreciated in past 2.5 months....but hey, if you say treasury just writes the cheque and all is fine then I of course believe you (not)...
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Why do you think the Fed gives a shit about MTM losses?

They can just hold to maturity and then remit to Treasury.
 
volpunter said:
wanted to see whether your balls are getting squeezed elsewhere also ;-)
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My balls aren't getting squeezed anywhere. If you think your pathetic attempt at ranting and raving about Greeks has got anything on my commentary, then it must be that German superiority complex manifesting itself again.

But I do appreciate your obsession with me and my balls - just keep in mind I don't prefer guys in that manner, my warm bruder.
 
volpunter said:
not if they paid above par.
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bonds_zps0846257b.png


So you think if someone purchased 10yrTs today which is over par as you can see, they would take a loss if that someone held to maturity?
 
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