The economy is also encountering a “conundrum,” with strong consumer spending boosting growth yet the job market faltering somewhat, Bank of America economist Aditya Bhave wrote in a note to clients. Or at least it was back in August, when the most recent official jobs report was released—the shutdown has meant the September report hasn’t arrived.If the Fed has been non-committal, it’s partly because Fed officials are divided . Inflation is higher than the Fed might like , prompting some policymakers to sup ...

We recently talked about how the Fed is going to make us rich. Now, that might be a broad statement. You might even say, "Well, Nick, that's just clickbait." However, all of the factors around what the Fed is doing currently, if we compare it to previous cycles, it has led to prices in this market going absolutely parabolic and melting faces.I don't believe that this time around is different. In fact, I do believe that we are going to see that same exact reaction but on a bigger scale. Let's take a quick lo ...

Core Insights - The Federal Reserve is facing pressure to halt the reduction of its $6.6 trillion portfolio of securities as money markets signal that quantitative tightening may have reached its limits [1][2] - Over $2 trillion has exited the financial system since the Fed began reducing its portfolio in June 2022, leading to a significant depletion of liquidity [3] - Interest rates among banks have risen, and the Fed's benchmark rate has also increased for the first time in two years, indicating tightening liquidity conditions [4] Group 1 - The upcoming Federal Reserve meeting on October 28-29 is expected to address the future of the Fed's securities portfolio, with indications that the process could end soon [5] - Wall Street strategists warn that the Fed must act quickly to prevent market distortions similar to those experienced in September 2019, when short-term rates surged due to tightening measures [6] - Major banks, including Bank of America and Deutsche Bank, have adjusted their expectations, now anticipating an end to quantitative tightening at the October meeting [7]

Core Insights - The anticipated altseason has not materialized, with capital rotation favoring Bitcoin over altcoins [1] - Bitcoin's market dominance has increased to 59.1%, while its price has rebounded to $111,000 from a low of $104,000 [1] - Ethereum ETFs experienced significant outflows, totaling $128 million, while Bitcoin ETFs saw inflows of $20.33 million, led by BlackRock's IBIT with $108 million [2] Market Dynamics - The Altcoin Season Index is at 24, indicating a strong preference for Bitcoin, as Ethereum struggles to surpass its 2021 high of $4,800 [3] - Bitcoin commands 27.17% of Binance's futures market, with trading volume reaching $543.33 billion in October, up from $418 billion in September [4] - Analysts suggest that if the current trends in funding rates and open interest persist, Bitcoin may break through historical resistance levels [5] Investor Behavior - The current market trend shows liquidity flowing into safer assets like Bitcoin before moving to riskier altcoins, consistent with previous cycles [6] - Bitcoin has surged 8.5 times from its 2022 low of $15,400 to around $126,000, while altcoins remain stagnant [7] - Expectations of three Federal Reserve rate cuts in 2025 may lead to a return of liquidity to risk assets, prompting interest in altcoins [7]

JUST IN: 🇺🇸 JPMorgan expects the Fed to end quantitative tightening next week. https://t.co/cNkGFfkEzx ...

Monetary Policy - JPMorgan expects the Federal Reserve to end quantitative tightening next week [1]

Monetary Policy - JPMorgan expects the Federal Reserve to end quantitative tightening next week [1] - Rate cuts are anticipated [1] - Money printing is potentially on the horizon [1] Market Outlook - Bitcoin is expected to rise above $100,000 [1]

Financial Data and Key Metrics Changes - ARMOUR's Q3 GAAP net income available to common stockholders was $156.3 million, or $1.49 per common share, with net interest income at $38.5 million [3] - Distributed earnings available to common stockholders was $75.3 million, or $0.72 per common share, reflecting a total economic return of 7.75% for the quarter [3][4] - Quarter-end book value increased to $17.49 per common share, up 3.5% from June 30th and 2.8% from August 8th [3] Business Line Data and Key Metrics Changes - ARMOUR raised approximately $99.5 million of capital by issuing about 6 million shares through an at-the-market offering program [4] - The company repurchased 700,000 shares of common stock through its repurchase program during Q3 [5] Market Data and Key Metrics Changes - The Federal Reserve implemented a 25 basis point cut in September, with expectations for two additional cuts by year-end, creating a favorable environment for agency MBS [7][8] - Treasury yields declined, agency MBS spreads tightened by roughly 20 basis points, and volatility fell to its lowest level since 2022 [7] Company Strategy and Development Direction - ARMOUR's strategy focuses on growing and deploying capital thoughtfully during spread dislocations while maintaining robust liquidity and dynamically adjusting hedges for disciplined risk management [15] - The company aims to pay an attractive and stable dividend, with a current monthly dividend of $0.24 per share [5][6] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic environment has become more uncertain due to the federal government shutdown, but they expect continued structural demand for agency mortgage-backed securities [8][13] - The company anticipates that regulatory clarity around banking reform and a resumed easing cycle will serve as catalysts for high-quality liquid assets like mortgage-backed securities [13] Other Important Information - ARMOUR's portfolio is entirely invested in agency mortgage-backed securities, agency commercial MBS, and U.S. Treasuries, with a net duration of 0.2 years and applied leverage of 8.1 times [10] - The aggregate portfolio prepayment rates rose to 9.6 CPR in October, a 19% increase from the third-quarter average of 8.1 CPR [11] Q&A Session Summary Question: Current returns on incremental investments and hedge choices - Management expects hedged ROEs in the 16% to 18% range, slightly lower than previous quarters due to tight mortgage spreads [18] Question: Outlook for swap spreads and mortgage spreads on an OIS basis - Swap spreads are expected to normalize, providing a tailwind for the portfolio as a more effective hedge for MBS [20][21] Question: GSE deregulation and its impact on borrower rates - Management indicated that various levers could be pulled to reduce borrower rates, but there is a balance to maintain GSE attractiveness [24][25] Question: Interest rate volatility and its future evolution - Management believes that while short-term volatility may occur, medium-term volatility is expected to decline as the Fed continues normalization [32] Question: Economic net interest margin outlook - The future of the economic net interest margin will depend on the portfolio and the pace of Fed rate cuts [36][37] Question: MBS spreads and Fed rate cuts - Management noted that a pause in the easing cycle could lead to volatility, but actual cuts may unlock bank demand for MBS [42][43] Question: Stock valuation during capital raising and buyback transactions - The stock buybacks occurred at around $14.40 per share, and management is committed to being active on both sides of the equity account [45]

Core Viewpoint - A proposal by Dallas Fed President Lorie Logan to shift the Federal Reserve's interest rate target from the federal funds rate to the tri-party general collateral rate (TGCR) is gaining attention but faces challenges as the Fed's balance sheet reduction nears completion and leadership changes are expected next year [1][2]. Group 1 - Logan's proposal suggests that the TGCR, which reflects short-term loans collateralized by bonds, is a more accurate indicator of money market conditions impacting the broader economy compared to the federal funds rate [4]. - The TGCR market sees over $1 trillion in daily volumes, significantly higher than the $100 billion in daily fed funds trading, indicating a shift in market dynamics [3]. - The Fed has been reducing liquidity for three years, and as this process continues, short-term borrowing rates may become more volatile, making the timing for a change favorable [5]. Group 2 - Influential figures in monetary policy, including former Fed staffer Ellen Meade and former New York Fed head William Dudley, have expressed support for Logan's proposal, noting its technical nature and potential merits [6]. - Despite Logan's influence, the extent of support for her idea within the Fed remains uncertain, highlighting potential headwinds to implementing the change [6].

Core Viewpoint - State Street's chief investment strategist, Michael Arone, maintains a bullish outlook on the market heading into 2026, albeit with caution due to a small margin for error [2][3]. Economic Outlook - The economy is cooling modestly, inflation is improving, and Federal Reserve policy is moving towards a neutral stance [3]. - Arone anticipates the Federal Reserve will implement rate cuts at every meeting through the end of the year, with the possibility of two additional cuts in 2026 [3]. Earnings Expectations - Analysts have raised profit estimates for the third-quarter earnings, which is unusual and indicates a high risk of disappointment [2]. - Corporate outlooks will be more closely monitored than quarterly earnings beats, with expectations of cautious guidance from executives [4]. Investment Strategy - State Street remains overweight in equities and real assets, underweight in bonds, and holds minimal cash [4]. - Investors are encouraged to diversify into small caps, international equities, and equal-weighted tech exposure to mitigate risks associated with megacap stocks [4]. Real Assets Focus - Emphasis is placed on "real assets," including gold, commodities, natural resources, real estate, and infrastructure, as a hedge against inflation and rate volatility [5]. - A suggested portfolio allocation is a modernized 60/30/10 model, with 10% dedicated to tangible assets [5]. Market Resilience - Historical data suggests that government shutdowns do not significantly harm the economy, with expansions following 11 of the last 12 shutdowns [6]. - The long-term view indicates that the rising federal deficit may create structural headwinds, keeping rates elevated and increasing volatility [6]. Long-term Outlook - Stocks are expected to perform well as long as the economy continues to expand and earnings grow, maintaining their status as a reliable long-term inflation hedge [7].