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{'name': "🌊🚂 Fed's Rate Hikes & Treasury's Buyback: The Liquidity Crunch & Wheels Coming Off! 💰📉🛠️", 'image': 'ipfs://QmVKBGz62fUdhebA46P8E2dtSWwRPi9oLgR8E2625ceg1y/88876efa-321e-4784-9275-f6620ba4d22a', 'attributes': [], 'description': "The Federal Reserve's aggressive rate hike regime over the past 12 months, raising rates by 500 basis points from 0.25% to 5.25%, aimed to curb inflation. However, it unintentionally caused the long-term bond market to become illiquid. Rising interest rates made already issued long-term bonds less attractive compared to newly issued ones offering higher rates. \n \nThe lack of demand for long-term bonds resulted in a shrinking market depth and increased volatility, as depicted in the chart. The supplementary-leverage-ratio (SLR) requirement, implemented after the Great Financial Crisis, limited banks' ability to serve as market makers for long-dated Treasury bonds. Reduced liquidity and increased supply due to the Fed unloading its holdings further exacerbated the situation. \n \nTo address these liquidity problems, the U.S. Treasury announced a buyback program. This program involves buying back older Treasury bills from the secondary marketplace and swapping them with newly issued on-the-run Treasurys. The buyback program, scheduled for 2024, aims to eliminate older bonds and raise funds by issuing new ones. \n \nWhile some may view this program as a way to inject liquidity, it differs from the Fed's quantitative easing (QE) purchases. The Treasury's buyback is motivated by the liquidity challenges in the long-dated Treasury market. Similar buyback programs were implemented in the early 2000s to take advantage of lower interest rates when the U.S. had a budget surplus. \n \nThe Treasury's proactive measures suggest a recognition of potential havoc brewing due to the consequences of the Fed's aggressive rate hikes. Recent events, such as the ongoing banking crisis and the illiquidity in the long-term Treasury market, indicate the toll these rate hikes are taking. The effects of the rate hikes are beginning to emerge, affecting various sectors such as corporate bonds, real estate, and consumer credit. \n \nAs the Fed's wagon rolls along, the wheels are gradually coming off. Market impact and repercussions are yet to be fully realized, and it's important to brace for the potential impact as the drivers on the Sooner Schooner did during their unexpected mishap. \n \n🌪️💼📉 #FedRateHikes #LiquidityCrunch #TreasuryBuyback #MarketVolatility #LongTermBonds #FinancialMarkets #EconomicImpact #PotentialHavoc #CentralBankActions", 'external_url': 'https://limewire.com/post/3e5dd968-8fba-4009-9881-e2fc98c60ca8', 'image_mimetype': 'image/jpeg', 'image_integrity': 'sha256-93c5ed160c361b30e91ee24fe881570de1227afbed52f1b11434b801a877d65b', 'external_url_mimetype': 'text/html'}