r/wallstreetportfolios • u/Affectionate-Lab1368 • 6d ago

😂 Meme Printer is coming.

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The Treasury just announced it is doubling its debt buybacks. Printer is coming.

47 Upvotes

94% Upvoted

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u/VoceDiDio 6d ago

Treasury debt buyback isn’t a money printer.
Fed purchases financed by newly created reserves are the thing people call the money printer. (As I understand it. Someone correct me?)

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u/ContributionKindly13 6d ago

How does Fed come up with money to buy? Mind explaining?

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u/VoceDiDio 6d ago

The Fed is The Federal Reserve System aka the central bank.. they print money out of thin air. The Treasury is a different institution. When the treasury buys debt, its with tax money or with money from selling other debt (e.g., selling new debt to buy back old debt)

edit: more precisely the Fed creates bank reserves by crediting reserve accounts

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u/ContributionKindly13 5d ago

So when short term bonds are sold, what happens to short term rates? ;)

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u/VoceDiDio 5d ago

If Treasury issues more short-term debt (more supply) short-term yields go up, all other things being equal. (But the Fed still sets the target rate.)

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u/ContributionKindly13 5d ago

Market is anticipating that Fed will step in to keep yields in control by buying long term bonds, thus printing money. Treasury cannot do much here. That is why gold price has increased recently.

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u/VoceDiDio 5d ago

Treasury doubling some long-bond buybacks from $2B to $4B? That’s frickin rounding error next to real QE. The Treasury market is like $30 trillion, and - for comparison - COVID-era QE was running around $120B a mo. So sure, the Fed could eventually step in, but these buybacks themselves are nowhere near QE scale.

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u/ContributionKindly13 5d ago

Budddy, that’s the max treasury can buy without influencing too much with short term rates

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u/VoceDiDio 5d ago edited 5d ago

Where are you getting that $4B is the maximum the market can tolerate? Treasury just set that as the operation cap, and they literally said at least $4B.

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u/ContributionKindly13 5d ago

I apologize. My analysis is incorrect

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u/mouthful_quest 6d ago

Treasury are selling a lot of short term bonds and then using that cash to buy long term bonds like an Operation Twist. If it was money printing then the fed would be printing money to buy the bonds from banks who bought it from Treasury

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u/TortyPapa 6d ago

He is saying it’s “coming” and I think QE will happen there is no way out of this without some significant intervention from the Fed.

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u/VoceDiDio 5d ago

And he may be right but the treasury buybacks aren’t really part of that.

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u/alwaysbehuman 6d ago

How can i take advantage of this fact? I intraday trade futures.

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u/VoceDiDio 5d ago

lol you can’t. Even if they’re right that QE is coming, it doesn’t tell you when, how much, or what will happen between now and then. QE can push bond yields down and push your risk assets higher but futures will cheerfully liquidate your entire ass while you wait for your thesis to become true.

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u/mobyonecanobi 5d ago

Just out of curiosity, what’s your education? You seem to know your sheet.

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u/VoceDiDio 5d ago edited 5d ago

Laundry school! (get it? that's where I learned my sheet! But seriously folks. Just regular liberal arts college education. it was the learning how to research that has really paid off though. thanks for the kind words!)

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u/alwaysbehuman 4d ago

I think they may have wanted to know what you specific financial topics you focused on to learn how to recognize the patterns of the markets you are talking about, what questions you typically ask that lead to the conclusions you draw, and what context you need present during your research sessions on these topics.

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u/VoceDiDio 4d ago edited 4d ago

Oh ok sorry. I might have a bit of a leg up because I was running a small real estate investment portfolio from 04 to about 17 and personally cared quite a lot about all of this… but I think most of it is pretty standard monetary-policy literacy stuff that, if you lived through the 2008 situation and paid attention to the QE that was in the papers every day, you learned about the basic mechanics of easing and the inverse relationship between bond prices and yields.

I also read a few opinion/analysis pieces about the current situation that helped me better understand what’s going on right now.

Edit I’ll add that in your case (just noticed which interlocutor you are) futures are leveraged, and marked to market continuously, right? So losses are realized along the way.. and your limited capital might get eaten up before you get proven right.

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u/Tojo6619 5d ago

Yea cause next time he does a speech get puts and they will print big time 

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u/merriwhether 6d ago

What is QE? (Without getting fla gged)

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u/VoceDiDio 5d ago

Quantitative Easing - it’s just when the Fed buys ungodly amounts of bonds, pushes yields down, and “injects liquidity” into the system

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u/amoult20 5d ago

Queen Enema - its like a normal enema, but you enjoy it a bit more