CB balance sheet inversion: QE creates duration mismatch — CB holds long bonds funded by short-term reserves. Rate rises create negative carry AND mark-to-market losses. This is the current Fed situation post-2022. Red flag, not yet crisis signal.
CB balance sheet inversion: QE creates duration mismatch — CB holds long bonds funded by short-term reserves. Rate rises create negative carry AND mark-to-market losses. This is the current Fed situation post-2022. Red flag, not yet crisis signal.