Flow State #42

Daily Plan 9.5.23

Welcome back everyone!

The US Treasury persists in its strategy to divest from its security holdings, given that rates have consistently stayed above the 5% mark. As of now, there's no indication or plan to bring these rates down, and the intention seems clear – to maintain these elevated rates throughout the majority of 2024.

Taking a glance at the accompanying chart, it's possible to trace back the actions of the Federal Reserve as far back as 2007, particularly in relation to the Funds Rate and the S&P 500 price dynamics. It's evident that we've been in a phase where rates have been high for an extended duration. As we navigate towards the culmination of this tightening phase, there are signals that the economy could experience some jolts or unsettling events. While it's crucial not to draw parallels with the 2008 scenario, the resilience of the market, especially considering the Federal Reserve's trimming of its securities, is noteworthy and warrants attention.

2007 - Current Fed policy

Throughout most of 2023, a primary focus has been on the labor markets, which have not witnessed any significant spikes in unemployment. On the contrary, unemployment figures have been impressively stable, and consumer spending has persisted at elevated levels since the COVID era. Further emphasizing this trend, there hasn't been any discernible dip in consumer spending.

Shifting our gaze to Bank Deposits,