The Institutional Risk Analyst

This morning, banks are buying funding from the BTFP below 4.85% and selling Fed funds at 5.5%.

Bottom line: LOIS is screaming a message of warning. We know that members of the Fed are looking at this, but we wish there were more observations about it in their public statements. We don't expect the Fed to change its strategy. It is on a dual course of QT and rate hiking and will probably stay that course unless and until some shock occurs.