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Eruptions Market Report 3-22-23

The FED has created this banking crisis themselves by hiking rates faster than any other time in history.

Banks are being crushed under the weight of all this extra money that they owe the Central Bank for loans taken, along with US Treasuries crashing, eliminating a large amount of their capital reserves.

It is highly likely that a rate hike pause is near on the horizon.

We have been saying for months that these rate hikes are unsustainable due to the massive money printing that occurred during COVID.

Overall, Powell's tone was hawkish in his FOMC speech. He insisted that the FED will continue as planned to reduce their balance sheet with potential for further rate hikes. He maintained that the US banking system is strong and that all deposits are safe.

However, he did hint at a potential pivot depending on incoming financial data on the banking situation.

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