#美联储亏损 Breaking through the $200 billion mark!
The Federal Reserve reported on Thursday that its losses had exceeded the $200 billion mark. As of Wednesday, the Fed's earnings to the Treasury (a measure of its financial performance) had reached $200 billion. But Fed officials stressed that the indicator does not affect the Fed's monetary policy implementation.
Why did the Fed suffer huge losses?
It is reported that the indicator is called "Earnings Remittances Due to the U.S. Treasury" and is published weekly. According to data released on Wednesday, the indicator was -201.237 billion US dollars, the lowest since the data was recorded.
The loss stems from the interest paid by the Federal Reserve to major financial institutions in this round of interest rate hikes. In order to keep short-term interest rates at target levels, the Federal Reserve needs to pay banks and money funds compensation for depositing margin at the central bank. The cost of this interest rate management has exceeded the interest income generated by the Federal Reserve's holdings of bonds.
The Fed may continue to cut interest rates
Since the announcement of a sharp 50 basis point rate cut in September, the Fed's subsequent rate cut rhythm has become the focus of investors.
According to the forecast of the Chicago Mercantile Exchange (CME) "Fed Watch", the probability of the Fed cutting interest rates by 25 basis points in November is 62.5%, and the probability of cutting interest rates by 50 basis points is 37.5%. The probability of a cumulative rate cut of 50 basis points by December is 44.5%, the probability of a cumulative rate cut of 75 basis points is 44.7%, and the probability of a cumulative rate cut of 100 basis points is 10.8%.
Employment data remains one of the most concerned indicators of the Federal Reserve. At present, the market focus is on the US September non-farm payrolls report to be released this evening Beijing time. According to the Dow Jones consensus, the increase in non-farm payrolls in September will rise to 150,000 from 142,000 last month, and the unemployment rate in September will remain stable at 4.2%.
With the Fed's recent interest rate cut of half a percentage point and the possibility of further easing, its loss growth is expected to slow down as the interest expenses required to maintain its interest rate target are expected to be lower. Still, before the Fed can distribute money to the Treasury again, it must first offset the deferred assets, which could take several years.