RT Timmy Shen (@timmyhmshen)ICYMI — here’s a quick wrap of what we published during US session 👇🚀 Builders move: Farcaster founders Dan Romero and Varun Srinivasan joined stablecoin startup Tempo.🎯 Jump Trading agreed to act as a market maker for Polymarket and Kalshi in exchange for an equity stake, according to Bloomberg.🧮 Crypto exchange Backpack unveiled a tokenomics plan aimed at preventing “dumping on retail” and reached a $1 billion unicorn valuation.📺 Coinbase's Backstreet Boys-inspired Super Bowl a ...

Inflation has been falling aggressively.The deflationary force of AI, robotics, and tariffs are swallowing the US economy.The Fed must cut rates significantly. https://t.co/VGCzIrqDYn ...

Core Insights - The GSEs (Fannie Mae and Freddie Mac) are no longer the dominant force in the mortgage-backed securities (MBS) market as they were before the 2008 financial crisis, with their retained portfolios now accounting for only about 3% of the outstanding market [9][12][24] - Recent instructions from former President Donald Trump to the GSEs to purchase $200 billion in MBSs may not significantly impact the rates market due to the reduced scale of their hedging activities compared to the past [15][16][17] - The GSEs' retained portfolios have increased to $272 billion as of December, up $93 billion (52%) from May, but this growth is still modest relative to the overall market size [7][23][24] Group 1: GSEs' Market Position - The GSEs held more than $1 trillion of MBSs before the financial crisis, representing roughly a third of the market, but have since reduced their holdings significantly [9][12][14] - The Federal Reserve and commercial banks now hold a combined total of approximately $4.7 trillion in MBSs, which is about half of the market [7][24] - The GSEs' hedging activities have diminished, leading to a lack of significant influence on the rates market as they no longer manage a substantial duration gap [14][27] Group 2: Recent Developments - The Federal Housing Finance Agency clarified that the GSEs would be the buyers of the MBSs, with the combined incremental purchases not exceeding $200 billion [8][15][23] - Analysts expect that while the GSEs' purchases may affect MBS spreads, they are unlikely to have a major impact on the Treasury market due to insufficient hedging [6][17] - The GSEs' current cash reserves and potential MBS purchases could offset the Federal Reserve's ongoing balance sheet runoff, which has led to a decline in MBS holdings [24][29] Group 3: Market Dynamics - Nearly half of homeowners currently have mortgages at rates of 3% or less, indicating that significant refinancing activity would require a substantial drop in rates [28][29] - The longer high rates persist, the greater the future refinance exposure becomes as new mortgages are issued at higher rates [29] - The GSEs' past strategies involved extensive hedging through interest rate derivatives and Treasuries, which created volatility in the market, a dynamic that is less pronounced today [12][26][27]

Gold just suffered its biggest single day crash in over 40 years. Silver plummeted more than 30% in a move that traders are calling a capitulation event. And Bitcoin, well, the so-called digital gold shed nearly 10% of its value in a matter of days, dragging the entire crypto market down with it.The charts look like a crime scene. But the weapon wasn't a recession, and it wasn't a new war. It was a name.Specifically, the name of the man President Trump has just nominated to replace Jerome Powell as the next ...

President Trump chose a Federal Reserve chair he thinks he can count on to lower interest rates. History suggests three different ways presidents have come to regret that bet. https://t.co/jyrs5Wh5Gz ...

Federal Reserve Vice Chair Philip Jefferson said he was “cautiously optimistic” about the outlook for the US economy, suggesting strong productivity growth could help return inflation to the central bank’s 2% target https://t.co/nm2JQZWJvS ...

President Trump made a decision last week to nominate Kevin Warsh to run the Federal Reserve.Earlier this year, Warsh said, “I think of Bitcoin as an important asset that can help inform policy makers when they are doing things right or wrong.”https://t.co/HRdmows47N ...

Core Insights - The Federal Reserve is still grappling with the lingering effects of inflation that surged post-pandemic, impacting household budgets and influencing monetary policy decisions [2][10] - The Consumer Price Index (CPI) rose by 2.7% year-over-year in December, significantly lower than the peak of 9% in 2022, yet still above the Fed's target of 2% [3][10] - Fed officials are cautious about cutting interest rates further due to ongoing inflation concerns, despite previous rate cuts aimed at boosting the job market [4][10] Inflation Outlook - Fed officials are debating the balance between inflation control and job market health, with some expressing concerns that inflation remains above the target for nearly five years [5][6] - Factors influencing inflation include housing costs and the potential for tariff-related price increases to become sustained rather than temporary [7] - Fed officials, including Thomas Barkin and Raphael Bostic, emphasize the need for patience in addressing inflation, which has been stuck in the high 2s to low 3s range for the past two years [8] Interest Rate Decisions - The Fed's key interest rate was held steady in the most recent meeting, with expectations that it will remain unchanged for the next two meetings, at least until June [12] - There is a 66% probability of a rate cut in June, according to market forecasts [12] - Fed Governor Michelle Bowman expressed confidence that inflation will eventually reach the 2% target and suggested that the Fed should consider rate cuts if labor market conditions improve [9][11]

In the 15 years since leaving the Federal Reserve, Kevin Warsh has lectured often that the ideal central bank is one with the smallest possible footprint in the economy, focused intently on controlling inflation, and bound in part by policy rules rather than letting officials act as free-ranging "overlords." ...

Core Viewpoint - Investors are increasing their investments in long-dated Treasury yields and anticipating a steeper yield curve due to expectations that incoming Federal Reserve Chair Kevin Warsh will advocate for interest rate cuts while also reducing the U.S. central bank's balance sheet [1] Group 1 - There is a growing sentiment among investors towards higher long-dated Treasury yields [1] - The expectation of a steeper yield curve is linked to the anticipated policy changes under Kevin Warsh's leadership [1] - The Federal Reserve's balance sheet is expected to shrink as part of the new monetary policy approach [1]