Currency and money markets news scan: Don’t get triggered by the politics. One man is not the economy.

The Takeaway: Don’t get triggered by the politics. One man is not the economy.

No amount of reason is going to quiet the Trump Derangement Syndrome running rampant through the electorate of the United States. I am in the camp that the President does not have a reach extensive enough to put a negative dent in my life or the lives of any other people I know. I won’t disparage those who feel otherwise. It is not fair to their feelings.

I will say that if there is a serum out there that can calm all the angst, it may be floating around in a vial known as the markets. I won’t get into a discussion about the markets as a social and public policy construct (that’s for another day), but I will advise that we become aware of the reality of our relationship with government. We are outsiders and we should play the government like children play marbles next to a wall.

My general rule toward government is that for every dollar of tax you pay, you should be looking for two dollars and fifty cents of cash and other tangibles. As an outsider looking at government and looking in government whenever a window becomes available, I should be looking for incidences where government action, whether direct or indirect, leads to some market opportunity.

The question is, can I make a bet on government (state) action.

For example, the President’s announcement today that the United States is establishing a bitcoin strategic reserve. We are naturally inclined to ask ourselves, “What the hell is a bitcoin reserve and is my tax dollar being used to fund it? While I am not sold on bitcoin’s utility in the present form and have no intention of purchasing any, I would advise a client to take a look at the reserve’s legal framework, what the reserve means for monetary policy, and identify how its existence could create a trade.

We are not inside the walled gardens of government, but we should always ask ourselves, “How can I profit off of a state action?” And just as importantly, when we do ask ourselves that question, we are taking the opportunity to step back, take a breath, and rather than complain about perceived slights that may or may not occur, pursue an opportunity that may be created in front of us.

Alton Drew

6 March 2025

News scan …

Executive Office of the President. Bitcoin strategic reserve. “Today, President Donald J. Trump signed an Executive Order to establish a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, positioning the United States as a leader among nations in government digital asset strategy.” — White House.

New York Fed. Access to credit. “The Federal Reserve Bank of New York today released “Credit Insecurity in the United States, 2018–2023,” which introduces the Credit Insecurity Index, a geographic measure of credit access. The report, which uses the index to measure credit access at the national, state, city, town, and county level, finds the share of people in counties with the easiest access to affordable credit increased during the period covered. Still, more than one in 10 people live in counties where large shares of consumers rely on high-cost credit and struggle to manage debt.” — Federal Reserve Bank of New York.

San Francisco Fed. Economic outlook. “The U.S. economy continued to advance at a solid pace in 2024 but is showing some signs of slowing. The labor market has cooled relative to conditions in early 2024 and appears to be largely balanced. However, progress on inflation has slowed in recent months.” — Federal Reserve Bank of San Francisco. 

Banks. “Thanks to higher interest rates, banks’ unrealized losses jumped by a third at the end of last year.” — MarketPlace.

Private equity. “Dealmakers from the world of private-equity buyouts say the merger environment remains iffy in the face of economic uncertainties around jobs, inflation and tariffs. With activity in private equity getting off to a slower-than-expected start in 2025, a lower deal count will likely impact the investment-banking businesses of Goldman Sachs Group Inc. Morgan Stanley JPMorgan Chase & Co. Citigroup Inc. Bank of America Corp. and Wells Fargo & Co. in the first quarter.” — MSN.

Bank of England. Policy rates. “The Bank of England must slash interest rates to shore up the struggling economy, a top policymaker has warned, rejecting Andrew Bailey’s call for “gradual and careful” steps on borrowing costs.” — Yahoo! Finance.

The Data …

U.S. Treasury rates

According to Treasury data, the two-year rate ticked down slightly from 3.99% to 3.96% while the ten-year rate increased from 4.28% to 4.29%. The 30-year rate went from 4.57% to 4.58%.

Federal Reserve Bank of New York reference rates

There was not much change in the Federal Reserve Bank of New York’s reference rates. The Effective Federal Funds Rate for domestic unsecured borrowings between commercial depository institutions is at 4.33%. The Overnight Bank Funding Rate, a measure of wholesale, unsecured overnight bank funding costs, also held at 4.33%.

The Secured Overnight Financing Rate, which measures the cost of borrowing cash overnight secured by Treasury securities, came in at 4.34%, while the Broad General Collateral Rate, a measure of rates on overnight Treasury general collateral repurchase agreement transactions, came in at 4.33%.

The Tri-Party General Collateral Rate, a measure of rates on overnight, specific counterparty, tri-party general collateral repurchase agreement transactions, came in at 4.33%.

In need of advocacy services? Reach out to me at altondrew@altondrew.com to make an appointment.

DISCLAIMER: I am not a financial adviser. These blog posts are for educational purposes only. Trading of any kind involves risk. Your trading decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary.