Has The Fed Really Changed Policy?

Has the US Fed Fallen Behind the Curve Again? Does the ‘December 2018 Mini-Crash’ Warn of Approaching Troubles?

 

•      Despite assumed ‘major’ Fed policy change, money market flows remain negative

•      Money markets are ‘tight’ and there is a structural shortage of ‘safe’ assets

•      Shortages of ‘safe’ assets warn that financial markets are vulnerable to shocks

•      Policy-makers have fallen ‘behind the curve’ in terms of preventing financial stress

•      Portfolios need protection through more bond convexity and wider diversification