The Fed held rates steady today, as expected. 

 

Let's talk about what Jerome Powell said about the Fed's new asset purchase program.

 

Remember last month, the Fed started buying Treasuries again to address a liquidity problem that was bubbling up. 

 

Like 2019, it was "strains in the money markets" again, that prompted the return of Fed action. 
 

Not only did they start with $40 billion worth of short-term Treasuries (what Powell himself described as 'big'), but he said the situation would require ongoing $20-$25 billion a month (a perpetual liquidity injection — up to $300 billion a year, indefinitely).

 

As we've discussed along the way, this pro-liquidity pivot equals pro-asset prices.

 

One of the clearest reactions has been in gold:  it's up 34% in the 35 days since this December Fed meeting.

 

Let's take a look at the other moments in the past 50+ years of history, when gold had a run of this magnitude.   

 

    

As you can see, these comparables come with significant monetary, fiscal and/or geopolitical crises.

 

So, back to the initial question: What did Powell say today about this "not QE" liquidity injection program?

 

Nothing. 

 

How many questions did the room full of financial journalists ask about it in the press conference?

 

Zero. 

 

Meanwhile, gold was pricing in the permanent feature of Fed money printing.