By Laura Matthews and Sinéad Carew NEW YORK/LONDON, Feb 23 (Reuters) - Far from being a source of relief, the Supreme Court's takedown of President Donald Trump's tariffs has infused new risks and uncertainties into trade policy, U.S. debt and the dollar. The Court made no decision on refunds, leaving open the possibility of a hole of ‌around $170 billion in U.S. finances. Trump's furious rush to impose replacement levies has already raised hackles in Europe and fresh confusion about trade policy. The ...

Key TakeawaysJapan's Trade Ministry detailed $36 billion in joint US investment projects, led by a massive $33.3 billion gas-fired power initiative and $2.1 billion in crude oil.The New Zealand Dollar (NZD) dropped 0.76% to $0.6004 after RBNZ Governor Anna Breman confirmed the central bank will continue shrinking its balance sheet.President Volodymyr Zelensky criticized Donald Trump’s peace demands as "not fair," rejecting pressure to cede territory while Washington pushes for a rapid resolution.Chinese and ...

Federal Reserve Chair nominee Kevin Warsh has several paths toward reducing the central bank’s $6.6 trillion balance sheet but the process will be costly and lengthy, Wall Street strategists say. Warsh has called for dramatically paring the Fed’s massive financial footprint, rekindling the debate around the size of its portfolio which swelled after successive rounds of crisis-driven asset purchases. Minutes from the January policy meeting due Wednesday are likely to offer insights on policymakers’ latest ...

Let's start with the these Fed officials chiming in because this was interesting Danielle. This made headlines. You got Beth Hammock saying rates could be on hold for quite some time and then you had Lorie Logan echoing that saying current policy stance appropriate she says. I mean what did you make of that Danielle? That does not sound like two Fed officials who are you know jumping here itching to to cut rates because of this labor market. >> Uh it certainly does not. Um, and I would venture to say that t ...

(Bloomberg) -- Federal Reserve Chair nominee Kevin Warsh is likely to take a gradual approach to shrinking the central bank’s $6.6 trillion portfolio to avoid rekindling money market tensions, according to strategists at Citigroup Inc. Any attempt by the central bank to resume unwinding its balance sheet — a process known as quantitative tightening — could revive pressures in the $12.6 trillion repurchase market, the strategists said. The Fed abandoned the process in December after rates in the repo market ...

And that was exactly what the 1951 agreement brought to an end. The Fed had capped both short- and longer-dated Treasury yields during World War II and its aftermath to hold down federal borrowing costs. That recipe caused postwar inflation to soar, however. The Truman administration — in a watershed moment that crystallized the Fed’s autonomy over monetary policy — then agreed to let policymakers set rates on their own.“Rather than insulating the Fed, it could look more like a framework for yield-curve con ...

Now that President Donald Trump has announced his pick to helm the Federal Reserve after a stage-managed race, all eyes in the financial world are turning to how Kevin Warsh will shake up the central bank if he's confirmed to the post. Last year, Warsh reiterated his support for what he called "regime change" at the Fed, blaming the central bank for failing to prevent pandemic-era inflation in the first half of the Biden administration. "They have lost credibility," Warsh said in a June 2025 Fox News inte ...

Core Viewpoint - President Trump announced that Fannie Mae and Freddie Mac will purchase an additional $200 billion in mortgage bonds to lower mortgage rates and make home ownership more affordable [1]. Group 1: Government Sponsored Enterprises (GSEs) Actions - Fannie Mae and Freddie Mac are instructed to buy $200 billion in mortgage bonds, which is expected to drive down mortgage rates and monthly payments [1]. - The GSEs have already increased their retained mortgage holdings by approximately $69 billion in the second half of 2025 [6]. - If the GSEs add another $200 billion in mortgage bond holdings in 2026, they would approach their legal limit of $450 billion, with $225 billion for each [7]. Group 2: Market Dynamics - Long-term yields, such as the 10-year Treasury yield and the average 30-year fixed mortgage rate, are influenced by the demand for underlying bonds, with yields moving inversely to bond prices [1]. - The "mortgage spread," which is the difference between the 10-year Treasury yield and the average 30-year fixed mortgage rate, peaked at 2.96 percentage points in June 2023, significantly above the historical average of 1.76 percentage points since 1972 [5]. - The goal of the $200 billion purchase is to accelerate the compression of the "mortgage spread," which has already decreased to 2.05 percentage points by December 2025 [6]. Group 3: Historical Context and Federal Reserve Actions - Prior to the Great Financial Crisis, Fannie Mae and Freddie Mac were significant buyers of mortgage-backed securities (MBS), providing stability to the market [9]. - The Federal Reserve took on the role of market stabilizer after the GSEs went into conservatorship, purchasing $1.25 trillion in agency MBS between January 2009 and March 2010 [9]. - The Federal Reserve's pivot to quantitative tightening in March 2022 removed a major buyer from the MBS market, leading to increased volatility and higher mortgage rates [11].

Core Viewpoint - Bitcoin's price is influenced by a combination of long-term macro trends and short-term market-specific events as it approaches 2026 [1] Long-term Factors - The long-term factors affecting Bitcoin include global M2 money supply, disinflationary supply growth of Bitcoin, and its adoption [2] Short-term Drivers - Short-term drivers consist of market risk sentiment, interest rates, U.S. dollar strength, seasonality, central bank excess liquidity, supply of large Bitcoin wallets, and financial contagions [2] Current Market Conditions - As 2026 begins, several short-term variables are aligned favorably for Bitcoin, with tight credit spreads and a reduction in speculative derivative positions that contributed to the late 2025 selloff [3] - A supportive "risk-on environment" in equities is expected to benefit Bitcoin as it is viewed as a high-risk asset [3] Monetary Policy Impact - Monetary policy may provide a tailwind, with expectations of lower interest rates and a weaker dollar in the current year, alongside supportive liquidity from the end of quantitative tightening and renewed balance sheet expansion [4] Adoption Challenges - Adoption may slow in the first half of the year due to late-2025 volatility, but there is potential for improvement if regulatory clarity increases, particularly with the potential passage of the Clarity Act [4] Halving Cycle Considerations - The third year of the halving cycle has historically been challenging for Bitcoin, which may impact prices due to investor behavior following this cycle theory [5] - Historically, Bitcoin has gained about 70% from its annual low each year since 2017, but returns in 2026 are expected to fall short of this average [5] Correlation with Traditional Assets - There may be a shift in Bitcoin's correlation with traditional assets, with expectations that it will become less correlated to broader equity indexes, although it remains correlated to large-cap AI stocks [6]

Core Viewpoint - The Federal Reserve is initiating Treasury bill purchases exceeding $200 billion over the next 12 months to alleviate pressures in money markets, with an average expectation of net purchases around $220 billion from survey respondents [1][3]. Group 1: Federal Reserve Actions - The Fed decided to commence Treasury bill purchases after identifying that reserves in the financial system had fallen to levels deemed insufficient, as indicated by rising short-term funding costs [2]. - The Fed plans to buy approximately $40 billion of T-bills monthly, having already purchased about $38 billion this month, with additional operations scheduled for January [4]. - The decision to halt the reduction of its balance sheet, known as quantitative tightening, was made in response to increasing signs of stress in the $12.6 trillion repurchase agreement market [6]. Group 2: Market Conditions - Rising money market rates have been observed, increasing more rapidly compared to the Fed's administered rates than during the previous balance-sheet unwinding period from 2017 to 2019 [5]. - Concerns have been raised regarding inadequate liquidity potentially disrupting essential financial market functions, which could undermine the Fed's rate-setting capabilities and lead to broader market implications [7]. Group 3: Reserve Management Strategy - The December meeting minutes revealed discussions among Fed officials on targeting an appropriate level of bank reserves, with some suggesting a focus on money-market rates relative to interest on reserve balances rather than a specific reserve level [8].