According to the Federal Reserve’s latest balance sheet update (to last Wednesday, Feb 24), its remainder balance of bank reserves declined a touch from the week before. That week, Feb 17, had seen aggregate reserves rise to a record high of $3.38 trillion. These reserves are utterly abundant, no arguing that, but what does this mean?The other part of this [...]
China’s currency had been on fire for seven months straight. Rising nearly in a straight line, from May 27 last year until very early January this year, CNY had gone from a certain plunge into the devastating monetary abyss (unintentional devaluation) to a significant basis for Xi Jinping’s global boasting. This was no ordinary turnaround.The timing of it speaks initially [...]
Australia, by contrast, now that’s becoming a proper bond rout. While the country’s central bank clings to its yield curve “control” fantasy, the long end of the AGS curve has gone true vertical. Yielding as little as 1.04% just four weeks ago on January 28, the rate for that country’s 10-year government bond has added an impressive 83 bps in [...]
The offside of “synchronized” is pretty obvious when you consider all possibilities. In economic terms, synchronized growth would mean if the bulk of the economy starts moving forward, we’d expect the rest to follow with only a slight lag. That’s the upside of harmonized systems, the period everyone hopes and cheers for. What happens, however, when it’s the leaders rather [...]
52.1 Fedwire Breaks: Anomaly or Trigger?Fedwire, the interbank system that transmits billions between 9,000-plus members, broke on Wednesday. The Fed says, "operational error" implying mere technical trivia - an anomaly. Why do some breaks stay mere anomalies while others trigger volatile, systemic consequences? [Emil's Summary] The theme of Making Sense Episode 52 is how an environment reacts to an anomaly. [...]
DISCLAIMER: The opinions expressed within the content are solely the author’s and do not reflect the opinions and beliefs of the website or its affiliates. 51.0 Reading Around: Pettis On Tariffs and US Jobs Economic historian Michael Pettis' essay on why an "obsolete understanding of trade flows ends up pointing trade policymakers in the wrong direction." A reading, by Emil [...]
All the signs were there, starting with the fact that the Fed and ECB together had supposedly the flooded the world with digital money yet a palpable “something” was really off. Ben Bernanke’s central bank had unleashed both ZIRP and QE, the latter of which had finished up a couple months before. In Europe, Jean Claude-Trichet’s outfit was “highly accommodative” [...]
DISCLAIMER: The opinions expressed within the content are solely the author's and do not reflect the opinions and beliefs of the website or its affiliates. 48.0 Reading Around: Myrmikan on System-Critical Short Squeezes Financial historian Daniel Oliver's essay on the systemic consequence of the 1907 short squeeze on United Copper Company and lessons for today. A reading, by Emil Kalinowski. [...]
50.0 Why Economists Kept Getting the Policies WrongJeff Snider reacts to two recent articles: "Bond yields are not good predictors of inflation" (Peterson Institute for International Economics) and "Why economists kept getting the policies wrong" (Financial Times). ———SPONSOR——— But first, this from Eurodollar Enterprises! The motion picture event of the summer: (Con)Tango & Cash. When an international smuggling ring uses the [...]
According to the Federal Reserve’s preferred inflation measure, the PCE Deflator, consumer price pressures remained muted in January 2021. No surprise, given the absence of inflationary conditions contained within the prior released CPI report for the same month, as even the contribution from surging oil prices was noticeably minimal in both. The Bureau of Economic Analysis (BEA) today said that [...]
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