According to the recent release of the Federal Reserve’s projected forecasts, that’s it. It wasn’t one and done like Chairman Powell had initially indicated, this “midcycle adjustment” hits two. And that is it, at least if you believe the current calculations spit out by the Fed’s models. It goes along with Powell’s blunt statement he made at the press conference [...]
Jay Powell’s disastrous week is coming to a close, not yet his long nightmare. He has been battling fed funds (meaning repo) for his entire tenure dating back to February 2018. This week wasn’t the conclusion to the contest, just the latest and biggest round of it. According to DTCC, the GC repo (UST) rate came back down to 1.975% [...]
According to DTCC's repo #s, there's a good chance fed funds was outside the range today, too. It was put at 3% this afternoon despite this morning's FRBNY operation, which is still higher than Monday when EFF sat right at the upper bound. https://twitter.com/JeffSnider_AIP/status/1174425376048787457 In case it wasn't clear, I was being sarcastic in the tweet above. Despite these being [...]
Before the repo rumble this week, Federal Reserve Chairman Jay Powell wanted to coast into a second rate cut on the comforting breeze of his insurance rhetoric. No longer one and done, that’s done, a second straight cut would be more consistent with a more forceful yet unnecessary policy response. Again, his publicly stated view is that the US needs [...]
What’s transmission got to do with it? An odd question perhaps, but not when you step back and think about everything you’ve been taught or told about when it comes to this stuff. From the very beginning, they tell you unequivocally how the Fed is in the middle and everyone must simply obey. It does things with its printing press [...]
Before the Great “Recession” ended the business cycle as we once knew it, there was a widely accepted concept known as stall speed. In the US, if GDP growth decelerated down to around 2% it suggested the system had reached a danger zone of sorts. In a such a weakened state, one good push, or shock, could send the economy [...]
There is one additional important point to note in all this repo uproar. Why did the Fed conduct the overnight repo operation this morning? The answer isn’t what you might think. It sounds like officials particularly at the Open Market Desk sounded the alarm about repo and the FOMC forcefully responded. And if you think that, policymakers would be beyond [...]
There are seasonal bottlenecks which litter the calendar. Why did Lehman fail two weeks before the end of the third quarter of 2008? Bear Stearns, if you remember, came to the end of its rope…two weeks before the end of that year’s first quarter. And here we are again today two weeks before another quarter-end. US money markets are in [...]
Finally, finally the global bond market stopped going in a straight line. I write often how nothing ever does, but for almost three-quarters of a year the guts of the financial system seemed highly motivated to prove me wrong. Yields plummeted and eurodollar futures prices soared. It is only over the past few weeks that rates have backed up in [...]
Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, he reassured, any softening was [...]
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