Jay Kahn

Why is it hard to pin down the "right" size for a central bank's balance sheet? Our note breaks down the tradeoffs involved. 👇

Great discussion between Bill Nelson and @DavidBeckworth on balance sheet design (with a kind mention from Nelson of our trilemma note).

@aRishisays Even if you could replicate Bloomberg's data access and were starting fresh, why would you replicate a 1990s keyboard-driven UI???

So tired of this! Perplexity isn’t going head to head with Bloomberg! What these larpers don’t know is that not every trader has or even needs access to a Bloomberg Terminal! Many people use Refintiv and other platforms which are much, much cheaper! So if anything, that’s your first line of competition. Not Bloomberg. Also, equity traders may not understand this but there’s a world outside of Nvidia! There are so many markets where you need OTC quoted from Dealers. You expect to fetch that from Yahoo Finance and Fred? Any platform, to be useful, needs to provide seamless access to data first, and then the ability to manipulate or visualize the data using charts or dashboards, feed into your algorithms, and then trades. And once you have all that, you’re competing with Refiniv, assuming they don’t improve their offerings significantly by then! But even assuming this can be done, it still won’t matter because of what truly stands Bloomberg apart - Network Effects! So, no matter how many retail traders use Perplexity to create tools to analyze Nvidia earnings, it will never be a threat to Bloomberg. Only when the largest players start using it, especially for the non-listed stuff, can it become a serious competitor. Until I can find everyone I need on the messenger of that platform, I can’t do away with Bloomberg. As much as I’d like Bloomberg to feel threatened - so that they improve some of their stuff - it’s under no threat, because they know they are not competing on price!

Thread on the note here: x.com/jstatistic/sta…

Will be adopting the significant improvements @RobinWigg made to our diagram going forward.

Post here: dallasfed.org/research/econo…

Why are repo liquidity and interbank liquidity so disconnected? Rosie Levy and Matt McCormick have a great new article at the Dallas Fed 👇

I get a lot out of talking to market participants. But equilibrium is the core thing economics brings to the table: for every seller, there has to be a buyer. Everything else is just tools built around that insight.

You can roll your eyes at “equilibrium” all you want, but I distinctly remeber asking a senior trader why there was no liquidity and he said: “Because nobody is buying.” Stupid question on my part—why would he know?—but also the point. Somebody has to think about equilibrium.

New #FEDSNote: A brief history of bank notes in the United States and some lessons for stablecoins: federalreserve.gov/econres/notes/… #econtwitter

No one really knows how big the U.S. repo market is. Or rather, no one 𝑑𝑖𝑑. We combed through the appendixes to a decade of annual reports for over 150 dealers and banks to get the full picture. The total? $12 trillion, almost doubling previous estimates.

@tylermacro10 @BlacklionCTA This might be helpful to you newyorkfed.org/medialibrary/m…

@BlacklionCTA @jstatistic So why is fed funds below it

Our latest FEDS Note offers a new lens for focusing on the tradeoffs involved in setting the size of central bank balance sheets: The central bank balance-sheet trilemma

@tylermacro10 @BlacklionCTA I think of IORB as an anchor, with RRP forming more of a (somewhat porous) floor now, but it depends which market you're looking at. We've seen money market rates both above and below IORB in quite recent memory.

@BlacklionCTA @jstatistic That depends ànd is the opposite of what was originally intended Look at the graph….

@DerivativesDon @shortisaverb Sorry like this one better

@shortisaverb Jay must have deleted the post - hopefully the new attachment worked

Why is it hard to pin down the "right" size for a central bank's balance sheet? Our note breaks down the tradeoffs involved. 👇

The Federal Reserve has to grapple with the question of how big its balance sheet should be after it stopped shrinking its $6.5 trillion portfolio, according to economists at the central bank bloomberg.com/news/articles/…

A new #FEDSNote discusses the tradeoffs involved in the size and dynamics of central bank balance sheets: federalreserve.gov/econres/notes/… #EconTwitter

My kind of click bait!

Link here: federalreserve.gov/econres/notes/…

The trilemma arises because, with a small balance sheet and lower levels of reserves, rates become sensitive to small shifts in demand. A small balance sheet requires choosing between volatility in interest rates or more frequent operations to offset these regular shifts.