The Fed's Path From BTFP to YCC
In Brief: It’s About Oil Again
The Fed’s March Tool Box
Right now the Fed is doing everything it can to mitigate the liquidity crunch slowly engulfing credit. Some events coming up as noted in the article below are:
BTFP ends in March
RRP likely empties in March
Market expects a rate cut in March
The tools at Fed disposal include:
Delaying the BTFP expiration somehow on a case by case or wholesale basis
Winding down QT
Easing rates
Every single one of their tools is in the corridor for YCC, which itself is a form of QE. That’s not to say YCC will definitely happen. It is however to say that if the have to use it, they are in a panic. Nothing else will have worked.