On February 7, the 3-month LIBOR rate (US$) fell sharply. Traders were, as various media outlets reported, stunned. All sorts of excuses were issued, the goal of them cumulatively to deny your lying eyes. Falling LIBOR couldn’t have been the market, especially eurodollar futures, anticipating a rate cut because these same people had been saying (and betting) for nearly two [...]
The September 2007 50 bps rate cut was not actually the Fed’s first panic move; and I mean panic both in the sense that the global system was about to do that, as well as how policymakers were feeling in always being behind the times. Almost a month before, a little over a week after the system broke on August [...]
Don't waste your time worrying about things that are well worried. Well worried. One of the best turns of phrase I've ever heard in this business that has more than its fair share of adages and idioms. It is also one of the first - and best - lessons I learned from my original mentor in this business. The things [...]
No, no, no. Everything is awesome. The denials have spread faster than the market prices have changed. Globally synchronized growth did a number on a number of people. I really think it a function of time. It has been so long since we’ve seen economic growth, real economic growth, that so many just believe it has to happen because it [...]
It’s seems like a very long time ago now, back on March 1 the UST curve un-inverted. While most have been focused on the 2s10s, it was the middle front of the yield curve which has been out in front signaling growing distress (liquidity hedging). The difference in yield between the 5-year note and the 52-week bill had tumbled throughout [...]
This is really getting out of hand. For the fourth day in a row, unofficially, effective federal funds or EFF remains above IOER. At the same, now the 10-year UST yields less. What was last week pretty concerning stuff before the Fed’s capitulation is this week whatever category lies below. This is not a resumption of the bond bull market. [...]
The Netherlands is the latest in Europe to move away from the center. A relatively new political party in Holland, formed in 2016 it stunned convention this week. Dutch voters were electing provincial parliamentary representatives who then determine seats in the country’s Senate. The Forum for Democracy (FfD) party will go from two to twelve campaigning on a “Dutch first” [...]
Europe is a total mess, no one can (honestly) argue otherwise. But that’s just Germany and France, right? PMI’s in those countries were a disaster. Those reported for the US weren’t really all that bad. Weaker, sure, hardly the obvious sinking especially when compared to German manufacturers. IHS Markit’s flash US Manufacturing Index for March 2019 was 52.5. This was [...]
Confirmation that it wasn’t a shallow Rhine and emissions regulations. Something big is going on in Europe, Germany first. And if the German economy stumbles, particularly its industrial and manufacturing sector, we can reasonably infer its cause – the entire global economy is suffering. As is standard practice, when weak data began showing up last year it was attributed to [...]
These things are actually quite related, though I understand how it might not appear to be that way at first. As noted earlier today, the Fed (yet again) proves it has no idea how global money markets work. They can’t even get federal funds right after two technical adjustments to IOER (the joke). But as esoteric as all that may [...]
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