The liquidity the Fed made available was initially not enough to satisfy demand, resulting in the Fed's target range of 1.75 - 2% interest rates being breached.
In short, the Fed have been lending 'primary dealers' money, but the dealers in question have put up some form of collateral in order to acquire the funds, such as Treasury securities.
The Fed's next decision on monetary policy takes place on October 30th - 24 hours before the UK is supposed to leave the EU. If a no deal happens, then it is not difficult to imagine this having an impact on market liquidity, especially if traders were to re-position funds into alternative currencies or be forced to liquidate holdings for cash.
A day after the Fed raised interest rates on March 21st 2018, Donald Trump asked the U.S. Trade Representative Robert Lighthizer to look into applying tariffs on $50 - 60 billion of Chinese goods.
On September 17th 2018 the U.S. announced 10% tariffs on $200 billion of Chinese imports to begin on the 24th. The Fed raised interest rates on the 26th. When the Fed cut interest rates on July 31st this year, a day later the Trump administration imposed new 10% tariffs on $300 billion of Chinese goods.
These came into effect on September 1st. As much as Donald Trump criticises the Fed, he has a curious habit of announcing escalations in the U.S. / China trade war that serve as well timed distractions from the central bank's actions and communications.
What are the chances of an upcoming round of talks in early October yielding little progress, leading to Trump doubling down on tariffs in and around the Fed's next meeting? Based on past evidence it is a distinct possibility.
https://www.zerohedge.com/political/confluence-events-are-building-ahead-october-31st
In short, the Fed have been lending 'primary dealers' money, but the dealers in question have put up some form of collateral in order to acquire the funds, such as Treasury securities.
The Fed's next decision on monetary policy takes place on October 30th - 24 hours before the UK is supposed to leave the EU. If a no deal happens, then it is not difficult to imagine this having an impact on market liquidity, especially if traders were to re-position funds into alternative currencies or be forced to liquidate holdings for cash.
A day after the Fed raised interest rates on March 21st 2018, Donald Trump asked the U.S. Trade Representative Robert Lighthizer to look into applying tariffs on $50 - 60 billion of Chinese goods.
On September 17th 2018 the U.S. announced 10% tariffs on $200 billion of Chinese imports to begin on the 24th. The Fed raised interest rates on the 26th. When the Fed cut interest rates on July 31st this year, a day later the Trump administration imposed new 10% tariffs on $300 billion of Chinese goods.
These came into effect on September 1st. As much as Donald Trump criticises the Fed, he has a curious habit of announcing escalations in the U.S. / China trade war that serve as well timed distractions from the central bank's actions and communications.
What are the chances of an upcoming round of talks in early October yielding little progress, leading to Trump doubling down on tariffs in and around the Fed's next meeting? Based on past evidence it is a distinct possibility.
https://www.zerohedge.com/political/confluence-events-are-building-ahead-october-31st
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