Sunday, January 16, 2011

Zero Hedge on bank profits and steep curves

Zero Hedge here.

The Fed is pumping money at the low end but fewer loans are made at the long end. The spread for profits is there, but the volume small. The channel capacity in a low inflation environment is higher than the loan flow, we end up with too many bankers. Treasury dealers demand a larger commission to find Treasury bonds to buy. The Fed  feeds bond traders ever larger commissions. 

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