Dollar And Overseas UST’s
Gross FIMA misconduct. Jay says, not my problem! Fire the man. Immediately.
Banks Or (euro)Dollars? That Is The (only) Question
It used to be that at each quarter’s end the repo rate would rise often quite far. You may recall the end of 2018, following a wave of global liquidations and curve collapsing when the GC rate (UST) skyrocketed to 5.149%, nearly 300 bps above the RRP “floor.” Chalked up to nothing more than 2a7 or “too many” Treasuries, it [...]
Stocks Are Still Not Cheap
A Prognosis for U.S. Stocks The future for U.S. stocks over the next decade appears ominous, regardless of the impact of the Coronavirus. Why? Because valuations matter. And stocks at the end of February were priced for perfection. Any significant negative development was poised to drive them lower. The COVID-19 Virus that shut down the U.S. economy has certainly qualified. [...]
(No) Dollars And (No) Sense: Eighty Argentinas
India like many emerging market countries around the world holds an enormous stockpile of foreign exchange reserves. According to the latest weekly calculation published by the Reserve Bank of India (RBI), the country’s central bank, that total was a bit less than half a trillion. While it sounds impressive, when the month began the balance was much closer to that [...]
A Marathon, Not A Sprint
Stocks rose last week, a breathtaking, nearly 20% run off the recent lows before a pullback Friday trimmed the gain for the week to about 11%. That was certainly helpful but investors would be well-advised not to get too excited. This is what bear market rallies look like. They come out of nowhere, they run much further than anyone thinks [...]
Vital Lessons Still Not Learned: Be Careful About GFC2
It’s one of those crisis-level-of-illiquidity things that if you heard about it in normal times it would make you shake your head in disbelief. During a full-blown meltdown maybe it’s not standard stuff, but given the chaotic conditions it doesn’t seem so preposterous, either. Negative convexity is an otherwise benign phenomenon in fixed income that when combined with a lack [...]
No Further Comment Necessary At This Point
I would write something snarky about bank reserves, but why bother at this point? It's already been said. If Jay Powell doesn't mention collateral, no one else does even though it's the whole ballgame right now. Note: FRBNY's updated figures shown below are for last week.
Collateral Shortage Goes Global, Hinting At The Way The (euro)Dollar Reaches Its Eventual End
Government securities have become so scarce that it is driving down repo rates. A collateral shortage that has become so acute, money dealers won’t part with their stock of government securities no matter what the price. Stop me if you’ve heard this before. Except, we’re talking about Japan and JGB’s here rather than UST’s. The trick is that both types [...]
Not Good: Eurodollar Futures Curve Sells Off, At The FRONT
If the Fed has promised to print an unlimited supply of money, then why are inflation expectations at crisis lows and falling? At the same time, there are still-growing signs of illiquidity and an interbank crackup. Bazooka after bazooka, yet they don’t seem to be having much effect. That’s true domestically but more so offshore. You may have seen references [...]
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