Everyone was really confused. China was the unstoppable monster, the economic powerhouse that had quite easily, it seemed, survived the Great “Recession” with barely a scratch. Its ascent to the dominant world position had been written long ago in stone, carved macro graffiti left in place especially as the so-called developed world struggled mightily after 2009.The Chinese were widely thought [...]
The way it was told, the US and worldwide economy in 2017 and for most of 2018 was absolutely on fire. Booming. They even came up with a name for it, calling the period “globally synchronized growth.” This was so good it was, everyone claimed, in danger of becoming too good. Inflation.To stay ahead of that monster, to keep the [...]
NOTE: This post was written on Thursday, February 10. This isn’t typical. Both the speed at which this has come about and the depth to which the it has now sunk, the yield curve’s wild flattening is simply breathtaking. Today’s accelerating CPI print accelerated the distortions all over the Treasury market such that it has taken a shape along key [...]
In the earliest days of the eurodollar, its purpose was primarily as a global reserve medium to intermediate and finance trade. To surmount Triffin’s Paradox, this ledger system arose as demand for the reserve currency outstripped the Bretton Woods arrangement’s ability to supply it (because it was constrained by US gold reserves). Rebuilding first from WWII and then an explosion [...]
As a follow-up to the post-October correlation in Treasuries, it’s worth reiterating how much more compelling the flattening curve has been given the full range of circumstances otherwise all lined up directly opposed to it. There has been: 1. Accelerating CPI.2. Higher oil prices.3. Looming rate hikes.4. Outwardly favorable labor data turbocharging expectations for even more aggressive rate hikes (and [...]
This thing, this massive supply disruption is a perfect example of a positive feedback loop. It began with government (over)reaction to COVID, as noted here impacting both supply and demand. Those two curves have behaved in classic fashion, inelastic supply unable to efficiently respond to an artificial outward shift in demand. The resulting impact price-wise as pure economics (small “e”).A [...]
What a time to forget it was the month for yearly benchmark revisions. After making a huge deal out of these spread across all kinds of economic accounts put together by various government agencies, I hadn’t remembered how February each year the BLS makes its contributions to correcting economic records for the payroll and employment data. So, I wrote this [...]
All eyes on Europe today where ECB Governor Christine Lagarde tried very hard to avoid committing to either rate hikes or the timing of them. Always conditional, she says. However, everyone knows different. With her counterparts at the Federal Reserve already committed to panicking over CPI rates, the latest HICP inflation numbers in Europe are not going to take any [...]
You have to hand it to Willian Dudley. Having committed one egregious error after another while in charge of the Fed’s New York-based Open Market Desk during the first Global Financial Crisis, Bill was kicked upstairs anyway to run that entire central bank branch following the debacle. He then continued on in the same spirit and with the same results. [...]
This will be written off as a temporary setback, and only then will anyone care if it follows in Friday’s payroll report. Just when the FOMC was counting on corroboration among all labor market data for its taper/balance sheet runoff/rate hike justification, this morning ADP threw a whole sack of wrenches in those plans. In the wake of the sack, [...]
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