Chinese authorities responded to their faltering economy in 2018 by diverging from their Western counterparts. Their PBOC would lean into rate cuts (RRR) at the very same time America's Federal Reserve would accelerate more in the direction of rate hikes. The ECB, for Europe’s part, intended to follow the Fed’s path, reaching December 2018 and terminating its own QE with [...]
With the first Federal Reserve rate hike widely anticipated (all but confirmed) for the March 15-16 FOMC meeting, this means that every one of the bill tenors with the exception of the 4-week are now inside that window. The 8-week maturity moved into it last week, on January 20, so its equivalent yield is now pricing higher alternative money rates [...]
Technically speaking, the rebound from the 2020 recession wasn’t strictly a supply shock. That was a huge part of it, no doubt, but a near-concurrent demand shock, if you will, also materialized. The combination of the two left the public bewildered, believing it an actual inflationary impasse which could only be further passed on into this year.Consumer prices did rise, [...]
Given yesterday’s Census Bureau data on retail and wholesale inventory, there was a solid though not necessarily good reason to suspect how today’s BEA report on US real GDP might surprise to the upside. The way GDP is tabulated, inventory contributes to the figured increase; the bigger the inventory build, the higher calculated output goes. The fourth quarter’s increase in [...]
It’s not hard to reason why there continues to be this conflict of interest (rates). On the one hand, impacting the short end of the yield curve, the unemployment rate has taken a tight grip on the FOMC’s limited imagination. The rate hikes are coming and the markets like all mainstream commentary agree that as it stands there’s nothing on [...]
The first time I can consciously remember using the term landmine was probably here in February 2019. I had described the same process play out several times before, I had just never applied that term. There was all sorts of market chaos in the final two months of 2018, including a full-on stock market correction, believe it or not, leaving [...]
Oil has easily, it appears, rebounded after having moved lower in November. It bottomed out that first big day of omicron fear on December 1 (ironically, or not, the same day the eurodollar futures curve inverted). Since a low of just over $65 (WTI), crude’s front futures price is easily back in the $80s thereby threatening to make January’s US [...]
When growth stops being growth, or the same growth, what do you do? The Keynesian textbooks all say “stimulus”, but what happens if the stimulus doesn’t stimulate? Worse, when it doesn’t stimulate because it can’t due to other pre-existing and intractable impediments.This is Xi Jinping’s dilemma and it only begins with the textbook’s missing chapters on eurodollar money.So, let’s start [...]
Stop me if you’ve heard this before. Longtime readers/followers/enthusiasts will be forgiven for immediately thinking I’m quoting myself again, as I so often do: Following its emergence, the eurodollar market played a big role in the Bretton Woods system and also its breakdown and eventual demise in the early 1970s. The primary reason I refer so much to my own [...]
The term “geopolitics” has a specific meaning, though in the context of assessing markets and their equally ubiquitous though purposefully non-specific “jitters”, it’s basically a catch-all, too. Should the stock market, in particular, take a bad step, reflexive commentary is quick to call up geopolitics. Such was absolutely the case late in January 2018 into the following month of February. [...]
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