Arthur Hayes, former CEO of BitMEX, believes that upcoming U.S. Treasury policy actions under Secretary Janet Yellen will have a major impact on the liquidity situation, driving the rise in cryptocurrencies and stocks. I think it may cause it.
Hayes said the market will be watching the Fed's policy decisions because the Treasury has only three options for policy action next week, and each option has the potential to inject high levels of liquidity into the market. He said that it should be stopped.
haze Guessed some unconventional strategies The Treasury is likely to introduce the policy after a significant increase in tax revenues, adding approximately $200 billion to the Treasury General Account (TGA).
Haze forecast scenario
The TGA is the U.S. government's primary operating account, and its management is critical to federal spending and broader financial market liquidity. Yellen is scheduled to announce the next Treasury refund the week of April 29th.
Zero TGA
In Hayes' first scenario, the Treasury would stop issuing new bonds and instead use up the TGA balance, effectively injecting about $1 trillion into the market. This could lower interest rates and increase the money supply available for lending and investment, boosting economic activity.
Transition to Treasury Bills
In a second scenario, Hayes suggests turning to short-term borrowing through Treasury bills. That means reducing the balance held in reverse repurchase agreements (RRPs) and increasing market liquidity by an additional $400 billion. The Federal Reserve uses RRP to manage short-term interest rates and control excess reserves.
combination approach
The most dramatic scenario is a combination of the first two, in which the Treasury suspends long-term debt issuance and aggressively reduces TGA and RRP balances, releasing a total of $1.4 trillion into the financial system. choose to.
Market impact
Mr. Hayes did not mince words in emphasizing Ms. Yellen's pivotal role in these potential developments, saying that given the potential impact on market forces, Ms. He said he was a person.
He predicted that implementing any of the three strategies would boost the stock market and help revive the crypto market, which is already in a bullish phase. However, financial analysts are divided on the feasibility and potential consequences of Hayes' predictions.
Others echoed his enthusiasm and suggested that such aggressive liquidity measures could boost markets amid current economic pressures. In contrast, some warn that these moves could have unintended consequences such as inflationary pressures and increased market volatility.
As the date for the Treasury's next quarterly payment announcement approaches, the financial world remains on alert for signs that Ms. Yellen may adopt such an unconventional strategy. These decisions are very important because they can set a precedent that a country's economic policy can have a major impact on global financial markets.
