Deconstructing long-term interests may seem like a purely academic exercise. This is certainly how Economists treat it, coming at them using their statistical models. The goal is always to properly interpret these most basic of economic, financial, and monetary fundamentals so as to understand where everything that matters stands. Getting this wrong is the difference between night and day; between [...]
As Ben Bernanke has another one of his myths begin the process of falling apart, his successor Janet Yellen chimes in today with yet another reminder why that must be. Though Yellen now sits in an even bigger chair, so to speak, having failed upward to Treasury, this one’s the sort of thing upon which a Federal Reserve Chairman would [...]
The standard explanation for low bond yields has been driven by – who else? – Ben Bernanke summing up the view from econometrics. Term premiums, he says, these made-up decomposition components which only allow for QE to save a tiny bit of its face. In other words, QE obviously didn’t lead to recovery, it sure didn’t create modest let alone [...]
68.2 US Treasury Bond Futures Crossed Red Line Long Ago———Part 2 Summary———Open interest in US Treasury Long Bond futures have crossed the 800,000-line only a few times in the past quarter-century. Nothing ever good happened in markets or the world economy when that happened. Where are they today? Almost 1.2 million. Why, who and when? ———Sponsor——— But first, this from Eurodollar [...]
68.1 This is the Hedge Fund Trade that Blew Up in 2020———Part 1 Summary———The rise and fall of an arbitrage trade by hedge funds known as the Treasury cash-futures basis trade. That was the focus of an excellent research paper by two government researchers. But there's just one problem. They don't ask what caused the rise of the basis trade [...]
This goes back to the earliest days of the Federal Reserve. In 1912 and even before, in order to sell the skeptical public on another central bank – the nation’s third, and first in three-quarters of a century - in what was already going to be an uphill battle, Congress demanded that this thing be called something other than a [...]
He certainly is at least when compared to the usual beauty contest contenders like Bill Gross or Jeff Gundlach who typically flock to these occasions. Here we are in reflation again, so interest rates must have nowhere to go but up. Therefore, it follows, bonds are in for a world of hurt all because inflation is being let loose by [...]
Treasury Secretaries, like Federal Reserve Chairmen, they don’t talk much about or pay much attention to the market’s need for collateral. They may pay some, but not specifically collateral if only under the vaguely defined category of “market consideration” when setting auction supply. Collateral shortages have come and gone, however dreadful, never eliciting a direct response insofar as supply has [...]
Trillions in “stimulus”, American consumers buying goods at a frenetic pace (in lieu of services), gasoline prices punishing, the start of favorable base effects, yet all those things couldn’t push the inflation rate much further beyond the Federal Reserve’s 2% explicit target. And remember, in order to meet the newly designed economic goals on the inflation side – average inflation [...]
Disappointing some, US real GDP managed to come in 6.2% higher in Q1 2021 when compared to Q4 2020. This was slightly less than the “consensus” which had figured around 6.6% growth and then the more optimistic calculations including the Atlanta Fed’s GDPNow tool that had only yesterday pointed to 8% (with some outlier whispers dialing up double-digit gains). Even [...]
Stay In Touch