As I said yesterday, why after just having an FOMC meeting and press conference where he said everything he wanted to including the usual one hour Q&A where every possible topic and question were discussed, would you have a Sunday night prime time interview on 60 Minutes, just 4 nights later? I believe because the regional banks are in trouble as a result of the CRE collapse, the FED is going to come up with some new bailout program, probably more specific to that particular problem. The BTFP was broader and was being gamed by the banks so it’s usefulness had run it’s course. He doesn’t want to cut rates until it is absolutely necessary to prevent a collapse and he has(either purposely or by dumb luck) got the bond market to lower them for him anyway. So the next logical step is a specific new program to help out the regional banks with their CRE bad loans. Either that, or something much worse. Could we be about to experience a week long Bank Holiday where the banks stay closed until the day after the President’s Day Holiday? If a new program and or a bank holiday gets announced tomorrow night, stocks will welcome the former, although that was already factored in on Friday, or will crash unless the stock market is also closed for the week of the bank holiday, if one is declared. Gold would explode higher with either option, but a lot more so with the later. “Bonds break free”
“This may explain what seemed momentarily inexplicable to me yesterday. Why did bonds catch such a huge bid after the Fed made clear it would tighten hard for longer? Because they saw what happened in banks yesterday and paid more attention to that. Bond investors got concerned, so some investors ran for safe-haven assets. Thus bonds caught a bid, then investors saw the rapid appearance of contagion today, and more ran for safe havens!

The Fed removed the following sentence from the FOMC statement: “The US banking system is sound and resilient.” Cynics asked why the Fed no longer sees “the US banking system is sound and resilient” – is it a signal of rumblings in the economy near-term…?

Call me such a cynic. While I wondered if it was just because the Fed is convinced the problems of spring are far enough past that no one needs their reassurance anymore, the present banking outbreak at the same time makes one think maybe they suddenly didn’t want to get caught offsides as, having once again, declared everything is sound, right when it was breaking. They might be tired of looking that dumb that regularly.

While the scope of the problem is uncertain, “it negatively impacts banking lending, the lifeblood of our economy,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. “Investors are buying Treasuries first, ask questions later.”

The Fed won’t pivot until big things break. Even then, it will prefer bailout programs over a direct reduction in its rate policy if it can pull that off. Is yesterday and today the sound of big things breaking?”
https://www.thedailydoom.com/p/the-sound-of-big-things-breaking