QE

Plot Thickens on End of QE & Start of Shedding Assets. Wolf has written that the Fed is looking to unload all the bonds off its balance sheet before rates start to go up. This seems rational, for a Fed that wants to avoid taking a huge loss on its $7TN of bonds. But it is kind of the elephant in the market: can it really unwind before crashing the market? Isn’t it always going to be the marginal seller?

The BoE seems to be about to follow the Fed’s playbook from last time. This will guarantee losses, maybe. But the Treasury is on the other side of the trade, so who really cares?

Wrap up

I didn’t really pay attention later in the afternoon today. Basically, the market went nowhere. Probably the “Giant Five” gave the overall market some lift.

Gold seems to be attracting some interest, even if it isn’t really making much headway. Bonds are struggling to break higher.

Workhorse Group ($WKHS), which makes battery electric vans, seems to be riding on $TSLA’s rise. Somewhat reminiscent of Nikola Corp. Everyone wants some of Elon’s magic powers of stockmarket levitation.

Suddenly everyone is wise about Wirecard ($WDI), even though the MSM (with a few honourable exceptions, such as the FT) had completely ignored the warning signals for a long time. No sign of any spillover effect in the direction of $TSLA.

Ten year yields seem to have reached a floor. Maybe worth writing some calls on futures.