The Fed's "Shit or Get Off the Pot" Moment

"Mark to market is an accounting practice that involves adjusting the value of an asset to reflect its value as determined by current market conditions. The market value is determined based on what a company would get for the asset if it was sold at that point in time."

Rising present day yields on bonds and treasury paper means that the value of a bond purchased one, two or three years ago is diminished.  It is underwater and would need to be redeemed at a loss should the holder need to cash in that bond in today's market.

Through Q.T. and raising the overnight rate, the Fed is "turning the screw".  Q.E. was the heroin - Q.T. is the withdrawal. 

If you are ever having trouble sleeping, go over to Treasury's website and look at the historical yields on government paper (Uncle Sam's I.O.U.'s).

Here's a link.

On April 21, 2020, if you had decided to buy a 30 year Treasury, you would have a yield of 1.17% - pretty fucking shabby, right?

If you had to sell that security in today's market to raise necessary cash, you would be fucked. You are a "hold until maturity" guy.  Anything that pops up and that necessitates the need for immediate cash (*cough* bank run *cough*) will cook your goose.  I remember seeing those yields and thinking, "Who in their right mind would lend this government/country money on a 30 year security and agree to that kind of yield?"

Shorter durations were the order of the day and I think that a mix of short to medium term durations are the way to go.  Short so that you can take advantage of the current rates available on money needed "TODAY" and medium term so that you can lock in some decent returns in the near term (7 year or less) future.

The job market is turning over.  There are still plenty of jobs available but not all jobs are created equal.  Translation: "Goodbye Meta job with six figure income, plenty of perks, nice bonuses and private parking space - Hello Marriott Hotel job with an income half of that paid by Meta and few if any benefits".

Oil prices are back to a level more in line with long term trends (and declining).  The "Everything Bubble" (which few people believed existed as recently as two or three years ago) is now acknowledged and bursting.  These are all deflationary pressures in the very long term.  If a war does break out, all bets are off.

Fed takes the safe route and jacks the overnight 0.25%.  That's probably the most prudent route.  Now they should focus upon standards - start auditing and making insured depositories get their shit together.  Still got "a long row to hoe".